AEGON takes €265m hit on unit linked costs
by Gill Montia
Story link: AEGON takes €265m hit on unit linked costs
AEGON is bringing forward measures to reduce costs for its customers with unit-linked insurance policies, having committed to the “best of class” principles of the Dutch Ministry of Finance.
In the past, the insurer’s approach has been to settle compensation with clients when the policy expires.
However, to comply with the Ministry’s principles, AEGON will now settle immediately by making direct additions to policy values before year-end 2012.
As a result, the company will take a one-off charge of €265 million before tax in the second quarter of 2012.
In addition, AEGON will reduce future policy costs, beginning in 2013 onward, for the majority of its unit-linked portfolio in a move that will impact underlying earnings before tax over the remaining duration of the policies by approximately €125 million on aggregate.
The quarterly impact in 2013 is expected to be €7 million before tax, to be mitigated by a cost savings programme in the Netherlands.