AEGON pays off $4.3 billion Dutch State loan

Insurer AEGON on Wednesday reported that it has repurchased all of the $4.3 billion of securities issued to the Dutch State as collateral for a loan it received at the height of the financial crisis in 2008.

The final repurchase involved $1.07 billion of core capital securities. With the repayment of the loan, AEGON has freed itself from restrictions imposed by the Dutch State, including no payment of dividends to shareholders and no product promotion.

AEGON, with significant operations in northeast and southwest Cedar Rapids, repaid $5.8 billion to the Dutch State.  Of that total, $4.3 billion covered the original issue of core capital securities and $1.5 billion was paid in premium and interest.

With the repayment completed, AEGON Chief Executive Officer Alex Wynaendts said in a statement that the company can focus on delivering  sustainable earnings growth with an improved risk-return profile.

"AEGON has turned a decisive corner and is today a significantly transformed company," Wynaendts said. "Over the past three years, we have implemented a broad range of strategic actions to create a more focused, cost and capital efficient organization, with a strong balance sheet and a substantially reduced risk profile.

"In addition, we have divested or put into run-off a number of businesses that did not meet our risk/return profile and which we concluded would not contribute to AEGON's growth prospects. It has been our top priority to complete the repurchase of the capital securities issued to the Dutch State at the earliest opportunity."

In the United States, AEGON has discontinued new sales of executive non-qualified benefit plans and related bank-owned and corporate-owned life insurance. It also has reached an agreement to sell its Transamerica Reinsurance unit for $1.4 billion to SCOR, a French global reinsurance company.

Wynaendts, in a conference call with reporters, said the Transamerica Reinsurance deal is on track to close this summer.

AEGON has begun to shift from margin-based products to fee-generating products like pensions and variable annuities, believing the latter offers a more stable and predictable income stream.

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