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Aegon prepares to sell off UK assets

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Aegon is preparing to sell off chunks of its UK operations, according to Sky News.

The Dutch company has hired investment bankers at Citi to oversee a number of asset sales that sources said could generate substantial proceeds for the parent company.

It is not yet clear which parts of the UK business Aegon is looking to dispose.

The process is understood to be at an early stage, with Aegon yet to make a decision on whether or not to proceed.

Aegon declined to comment.

Aegon’s UK operation saw year-on-year pre-tax earnings drop 4 per cent in the second quarter this year, from £26m to £25m, as new life sales plummeted 16 per cent.

The insurer’s Q2 2015 results, published in August, show new life business dropped from £226m to £190m, driven by “lower traditional pension production”.

Annuity sales across the sector have been hammered following the introduction of pension freedoms in April.

The firm also warned of “continued pressure” on pension earnings resulting from the automatic enrolment charge cap and the new retirement flexibilities.

It said: “The pension flexibility regulation that came into effect in April 2015, resulted in higher outflows from Aegon’s back-book in the second quarter of 2015.

“Aegon expects this trend to continue in the second half of 2015.”

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Comments

There are 8 comments at the moment, we would love to hear your opinion too.

  1. Over 30 years or so in financial services I have seen a fair few changes. From 226 Pensions to the current freedoms. Innumerable tax changes and of course the decline and extinction of many life offices. LAS, GA, National Mutual, Scottish Amicable, Mutual, Equity & Law, Manufacturers Life, Equitable Life, Abbey Life, GE, NPI and much of Scottish Provident and goodness knows how many more.

    But now I see the really big outfits shuffling and shedding, with disposals, mergers and closures a daily occurrence and all seemingly within a very short period. Whereas the other changes were at least spread over time – all this now seems to be a cliff edge.

    There must be something wrong somewhere. I don’t think it takes a genius to point the finger at Government policy – which naturally includes regulation. The pretence has now been dropped and the Regulator is really just an arm of Westminster and does its bidding, while Westminster continues to put on the show of pretending otherwise.

    So is this all a result of mis-management? True some of the above we are better off without, but others provided reasonable products and of course, enhanced competition.

    Are we now to end up with just one or two enormous entities and if so what is the Competition Commission going to do about it? What about one of the regulatory aims of improving and fostering competition?

  2. Tim tim@pagerussell.co.uk 9th September 2015 at 12:58 pm

    There’s an interesting theme developing here.

    Traditionally the UK market has been seen by overseas financial institutions as very heavily regulated, with a low return on capital, but too important to not be part of.

    We now have AXA and AEGON exiting, HSBC threatening “reviews” and people like Sanlam investing their capital elsewhere rather than building up their UK positions.

    So is the UK market now too heavily regulated – or just less important?

  3. Whilst I totally agree with the above comments, and I suspect that regulation that results in low returns and high risks is to blame, you can’t help but wonder at the utter mess that Aegon has made of the once great Scottish Equitable.

    Remember, this was a once small company that totally dominated the pensions market in the 1990’s with clever and innovative products (although really expensive).

  4. Christopher Petrie 9th September 2015 at 2:45 pm

    Sometimes it’s just because “things change”. Harry’s list of ex-LifeCos is indeed quite correct. But I could also say – what about Transact, Cofunds, 7IM, Just Retirement, Nutmeg, Money On Toast, Metro Bank, Voyant Cash-flow planning, Nucleus and the intrusion of companies like Morningstar, Trustnet, Financial Express and many others into our daily business lives.

    Times change, businesses evolve or die and new ones are born. The same applies to the electronics industry, pharmaceuticals and many others.

  5. Aegon have repeatedly stated that the future of their UK business revolves around their Wrap proposition and it would be a huge surprise if any sale was anything to do with this arm of the business.

    I suspect that the sale is something to do with older legacy assets that are far more expensive to run and cause a huge amount of legislative and administration problems for Life Cos.

    Basically sell off the back-book and concentrate everything on a more sustainable business model.

  6. John Joe McGinley 9th September 2015 at 4:10 pm

    They say that 60% of the jobs 10 years from now haven’t been invented yet. Perhaps the same is true of the financial solution providers of the future!
    I am a great believer in evolution not revolution and what we are witnessing is the realignment of the UK market where the innovative and flexible will be the winners of the future.

    JJ

  7. Heavy Regulation and the Capped Charges = not profitable

  8. @ Christopher Petrie

    While you are of course quite right I only spotted two new (what I would call) providers. Metro and Just Retirement. The others are just packagers as far as I know and actually don’t provide a product – they provide a service which utilises others products.

    On balance I think we have now fewer providers than used to be the case and that these now diminished numbers look to be reducing further.

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