Aegon UK’s pre-tax earnings for the second quarter fell by 50 per cent compared with Q2, 2010 as the provider’s distribution businesses recorded combined losses of £1m.
Aegon UK’s pre-tax earnings dropped from £18m in the second quarter last year to £9m in Q2, 2011.
The firm says this is primarily due to exceptional costs of £18m linked to the ongoing redress programme for Scottish Equitable customers after Aegon UK’s life and pensions business was fined £2.8m by the FSA in December and ordered to pay customers back £60m following “significant” administrative failings.
Aegon UK has also spent £7m developing new product propositions.
The provider’s UK distribution businesses, Positive Solutions and Origen, posted combined losses of £1m, an improvement on the £2m losses recorded in the second quarter of 2010.
This follows total distribution losses of £5m in 2010 and £16m in 2009.
Aegon UK chief executive Adrian Grace says: “This quarter’s results reflect the impact of the changes we are making in UK business as we reposition it for the future. We know that some of the issues we are tackling mean an adverse financial impact in the short-term but we also know they are changes that are essential in order to ensure our business is successful going forward.
“Earnings this quarter reflect the investment we have made in developing our plans to offer a new platform proposition for our chosen markets of “at retirement” and workplace savings markets alongside our existing product range.
“As we take the business forward, a key priority for us is to achieve the right cost base to operate our business competitively in the future. Our restructuring programme is on track with £58m of our target £80m cost reductions already delivered by the end of June. This is a challenging time but we are making progress in tackling the key issues and ensuring we are well positioned for future success.”