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Aegon launches £860m rights issue to repay Dutch Govt

Aegon has announced plans to raise up to £860m through an equity issue which kick-starts today.

The firm intends to use the proceeds of the issue to repay part of the £2.5bn hand-out obtained last year from its largest shareholder, Vereniging Aegon, funded by the Dutch state.

Chief executive Alex Wynaendts says: “It has been our intention to repay the £2.5bn to the Dutch Government at the earliest opportunity, provided it is both feasible and responsible to do so.

“Our decision to issue equity in the amount of up to £860m is the first step towards the goal of full repayment. Aegon’s current excess capital position gives us the flexibility to deploy capital in the business and puts us in a better position to work towards the goal of full repayment of the outstanding capital within the terms of our agreement with the Dutch state.”

The news comes as Aegon posts underlying earnings before tax of £328m for the first half of 2009 compared with £1bn in the same period last year. The figures include lower investment income as result of de-risking measures.

The firm made a net loss of £287m in H1 2009, which includes a one-time £331m loss from sale of Taiwanese life activities in the second quarter. This compares with a £369m profit in the first half of 2008.

New life sales brought in £871m in the first half compared with £1.2bn the previous year. The figures were propped up by an increase in US retail sales.

The firm freed up £1.37bn in capital in the first half of 2009, above its full year target. At the end of June the firm had £3bn surplus capital. It has retained its policy not to pay an interim dividend this year.

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