Aegon UK has seen its new business sales rise again as a result of changes to A-Day, but distribution division Positive Solutions is named among assets which collectively are listed as operating at a loss, according to the latest figures.
New business statistics for the first nine month of 2006 reveal Aegon UK’s operating earnings before tax have grown by 41% from £81m to £114m, aided mainly by a growth in “life for account of policyholders” business - up 10% - and an improvement to their off balance sheet products such as asset management and intermediary distribution.
However, off balance sheet products - which are said to cover distribution such as Positive Solutions, fees earned at Aegon Asset Management and several other elements of the group business not specifically named - are effectively operating at a loss as these assets made £12m in "earnings from fee businesses" up to September 30th, 2006 - up £5m on the previous period in 2005 - but are effectively at an operating loss of £1m because Aegon is still paying £13m into an incentive plan (listed as "excluding the charges of £13m" for the incentive plan) which it took over when they bought Positive Solutions last year.
At the same time, a group statement suggests “the positive effect of higher equity and bond markets” have played an important role in the firm’s growth.
More specifically, the firm notes A-Day has played a crucial part in its business growth and “a sustained increased in financial planning activity following A-Day has continued to have a positive effect, in particular on Aegon’s individual business” as individual and corporate business increased 56% to £768m in the nine-month period.
New pensions business rose 106% to £246m annual premium equivalent, with sipps contributing 137m APE.
During the first nine months of 2006, Aegon's total revenue in the UK increased 56% to £5.88bn, when premiums, investment income and fees and commission income are combined.
Individual protection sales rose 38% to £31m APE while onshore bonds business increased 39% to £39m APE and offshore bonds sales rose 46% to £44m APE.
But commenting at the same time as results were announced, Otto Thoresen, chief executive of Aegon UK, says he is concerned FSA developments and government pension reforms might yet impact market sales.
“The government’s pension reforms gather and the FSA’s review of retail distribution will be a major catalyst for change,” says Thoresen.
“As the government consider future plans it must be sure that it does not adversely affect existing pension and saving provision. The principal objective of any new initiative must be to reach new customers and to encourage more people to take responsibility for their financial well-being in the future,” he adds.
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