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Americas Report of the Executive board
“We retain a very strong focus on cost control, risk management and profitability. That – along with ensuring a wide range of both products and distribution channels – has been one of the secrets of our success in the past few years.” AEGON Americas reported strong underlying growth in 2007 from most of its lines of business. Higher returns from hedge funds, as well as limited partnerships and convertible bond assets, also contributed significantly to the overall growth in earnings. Operating earnings before tax were 5% higher at USD 2,876 million, while net income rose 12% to USD 2,184 million. Both the life and protection and the pensions and asset management lines of business reported strong growth in 2007. There was a decline in earnings from segregated funds in Canada and a significant decrease in the value of certain structured products during the year. Value of new business rose 18% to USD 581 million, driven primarily by stronger sales of life insurance and institutional business as well as the inclusion of mutual funds. The internal rate of return on new business was 13%, in line with 2006.
Background AEGON AMERICAS AEGON Americas comprises AEGON USA, AEGON Canada, AEGON Direct Marketing Services and Transamerica Reinsurance, as well as the Group’s joint venture in Mexico. AEGON USA is one of the leading life insurance organizations in the United States. It has more than twenty million customers and employs over 14,000 people. AEGON USA companies can trace their roots back as far as the mid-nineteenth century. AEGON USA includes some of the best known names in the US insurance business, including Transamerica and Monumental Life. AEGON USA’s main offices are in Cedar Rapids, Iowa, and Baltimore, Maryland, but with many associate companies’ offices located throughout the United States. Based in Toronto, AEGON Canada offers a range of insurance products and financial services, primarily through its Transamerica Life Canada subsidiary, first established in 1927. In 2006, AEGON acquired a 49% interest in Seguros Argos, one of Mexico’s leading life insurance companies. As part of their joint venture, AEGON and Seguros Argos have set up a jointly-owned pension fund management company, Afore Argos. Organizational structure AEGON’s operating companies in the United States are grouped together under a single financial services holding company, AEGON US Holding. Business is conducted through subsidiaries of two companies: AEGON USA Inc. and Commonwealth General. AEGON has operating licenses in every US state, the District of Columbia, Puerto Rico, the Virgin Islands and Guam. AEGON USA’s primary insurance subsidiaries include:
AEGON USA companies are present in five lines of business:
AEGON Canada’s main operating subsidiary is Transamerica Life Canada. Sales and distribution Like other AEGON companies around the world, AEGON USA uses a variety of distribution channels to ensure customers can access the Group’s products in a way that best suits them. AEGON USA’s main distribution channels include:
AEGON USA also provides a range of products and services online and uses direct and worksite marketing. In addition, AEGON Canada also uses agencies owned by Transamerica Life Canada and operates through the World Financial Group, part of AEGON Americas. Business overview United States Life and protection AEGON USA provides permanent life (or whole life), universal life, term life and variable universal life insurance and protection products. A number of the company’s subsidiaries also offer life insurance products tailored to specific segments of the US market. In 2007, life and protection accounted for more than 46% of AEGON America’s overall operating earnings before tax, making it the unit’s most important single line of business. Individual savings and retirement AEGON USA offers a wide range of savings and retirement products, including mutual funds, investment advice as well as fixed and variable annuities. In 2007, this business accounted for 25% of AEGON’s total operating earnings before tax. Pensions and asset management AEGON USA offers a variety of individual and group pensions, as well as retirement planning, investment, administration and technical services. Pension and pension-related products are generally offered through four subsidiaries: Diversified Investment Advisors, Transamerica Retirement Services, Transamerica Retirement Management and Transamerica Investment Management. Institutional PRODUCTS AEGON USA has a strong position in the US market for institutional products, providing a range of specialized financial products for banks as well as pension and investment funds. These products include traditional fixed rate guarantee investment contracts, or GICs, funding agreements and medium-term notes, as well as other management, administration and risk services. AEGON USA also provides structured products and bank-owned and corporate-owned life insurance. Reinsurance AEGON USA’s Transamerica Reinsurance unit has been providing reinsurance to the life insurance and financial services industry for the past thirty years. In the United States, Transamerica Reinsurance provides traditional reinsurance solutions for term, universal, variable universal and whole life mortality and morbidity risks. Transamerica Reinsurance also provides products and services to clients in Europe, the Asia-Pacific and Latin America. Business overview Canada Life and protection Transamerica Life Canada, AEGON Canada’s principal operating unit, offers a variety of universal and traditional life insurance products, predominantly term and permanent life insurance, as well as accidental death and out-of-the-country medical cover, serving both individual and corporate customers. Individual savings and retirement AEGON Canada offers a range of segregated funds, mutual funds, guaranteed investment accounts, single premium annuities and leverage-lending programs. Some of these are offered through strategic alliances either with banks and trusts or with investment management companies. |
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