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Restructuring and £18m PosSol costs lead to £11m Aegon loss

Update: a further article was posted on the Money Marketing website on Friday 9 August regarding Aegon’s comments about Origen: Origen chief: We’re not becoming a ‘tied network’

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Chief executive Adrian Grace

An £18m write down on the sale of Positive Solutions and £27m costs associated with the recent closure of its regional offices resulted in an £11m pre-tax loss for Aegon UK in the second quarter.

The provider’s Q2 results, published today, reveal the £11m pre-tax loss, compared to a £59m pre-tax profit for the same period the previous year and £23m profit for Q1. Year-to-date pre-tax profits stand at £12m, down 86 per cent on the £87m the previous year.

The results also reveal former IFA arm Origen is to be turned into a “tied agent network” for the provider. Aegon had previously announced the launch of a restricted arm for Origen advisers, using its ARC platform. But it now says all advisers will be tied to Aegon in all product areas.

Rather than separating out distribution profits, Aegon has now moved Origen’s figures into its pensions arm, which saw no profit for the second quarter, compared to a £7m profit for the same period in 2012 and £5m profit for the first quarter of this year.

Positive Solutions was sold to Intrinsic in June with Aegon taking a small stake in the distributor as part of the deal.

Aegon UK’s life business saw earnings before tax of £23m for the second quarter, up 53 per cent on the £15m for the same period in 2012 and 35 per cent more than the £17m in Q1. The provider says this was driven by favourable mortality and claims experiences.

Aegon says it now has 900 advisers using its ARC platform with AUM growing by around £100m a month. The provider would not disclose total AUM on the platform. 

The results also reveal a £13m impairment cost due to a corporate bond write down.

Chief executive Adrian Grace says: “We continue to divest businesses that are non-core to our future, such as Positive Solutions in the second quarter. We are also building and diversifying our workplace distribution capability and are delighted to have partnered with Mercers and Barclays in the first half of the year.

“Our platform has seen significant growth and is differentiated in the marketplace through its workplace ‘gating’ offering and its seamless transition for customers from accumulation to decumulation.”

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Comments

There are 12 comments at the moment, we would love to hear your opinion too.

  1. Another COMPLETE mess by by a corporate of its IFA strategy execution!

  2. Only a matter of time before origen is sold. Maybe the sooner the better

  3. Great news. I looking forward to telling their clients, especially their Corp ones!!!!!!!

  4. Assuming that this story is true, it would have been respectful if those affected (consultants,staff) were informed before it hit the press. Why is it that we are reading it in the press first?!

  5. What a mess. Aegon are an awful company to deal with.

    I suggest closing it.

  6. Former employee 8th August 2013 at 11:22 am

    @Anonymous at 10:44

    I am afraid this is what you must expect from disinterested parents and weak Origen leadership.

  7. Thank god I left!

    I cannot believe they did not tell the advisers and staff. Mushroom management at its best!

    The recruitment consultants must be queuing up!

  8. Seriously . . . are you really that bothered? No matter what the likes of Aegon do, you’ll all grumble about how bad it is. As for the comment made by Richard Bishop – “Close it” if they did close it, what would you say then Richard? “Shameful fools, all those people out of work” . . . Business is business, decisions are made and sorry but no matter what change is made, you’ll never please everyone.

  9. I have heard that this is not true, apparently it does not impact all of Origen (slippery slope?)

  10. ..but a least they are still sponsoring the tennis. Not all bad news then.

  11. How many £millions will be written off the value of PosSol when the class action gets going?

  12. Note from the CEO of Origen to Staff:

    Earlier today our parent company Aegon in the Netherlands announced it’s Q2 results.

    As part of these results Aegon UK was required to take an £18M financial hit as a result of the sale of Positive Solutions.

    As a further consequence of the sale of Positive Solutions, Origen is now the only fully owned distribution company remaining within Aegon UK, and given our relative financial size, a decision to consolidate our numbers within AUK’s for reporting purposes has been taken. This decision and intent was flagged to the markets in the announcement today.

    There was also reference in the announcement to Origen becoming a tied agent. Whilst this is partially correct in that we have launched OWS as a ‘restricted proposition which includes ARC (and this is sometimes referred to internally as a single tie’), it is not correct for all of our business. The emphasis in the Q2 update reflects the growing importance of OWS and its alignment to Aegon’s strategy.

    It is also worth noting that we have also recently undertaken a review of platforms for individual client business and added the market leading ARC to our panel of preferred platforms. Indeed ARC is our preferred platform for new Investment business giving customers access to a wide range of funds through a variety of wrappers.

    To support our whole of market propositions we compile a number of panels to ensure the best products/services are offered to our clients. These panels will include some Aegon products where they are market leading, including the ARC platform mentioned above.

    To confirm our position –

    We are a national fully employed distribution company. We are not, nor have any plans, to become a network.

    We offer a range of Propositions to the market. Some of these such as OWS and Aegon Annuity Services are Restricted to specific providers, others are currently whole of market.

    As with many distributors in a post-RDR world, we will continue to review our business model in light of market developments and our changing customer needs.

    We are fortunate to have such strong commitment from our parent company and are proud to be part of the Aegon Group.

    Not Sure who to believe!

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