Traditional, universal and term life insurance, segregated funds, annuities and professional portfolio management
He joined the Supervisory Board in 1997; his current term expires in 2003, when he will reach the statutory retirement age of 70.
As of 18 April 2002, the date of the Annual General Meeting of Shareholders, a new colleague will join the Executive
A more structural problem is the generalized decline in margins due to increased competition affecting the financial services industry. To cope with this, resourceful marketing, disciplined cost control and continually staying alert to underperforming activities will all remain priorities in 2002. In regional terms, AEGON USA’s priority for 2002 is to streamline its activities, to increase efficiency and lower costs, while keeping alert to potential acquisitions. AEGON
In the Americas, sales of fixed annuities, guaranteed investment contracts (GICs) and funding agreement deposits hit record levels.
In recent years, for example, many units have equipped their sales teams with powerful application programs on their laptop computers, allowing them to access marketing and administrative information anywhere and any time.
USA unit, won the Dalbar Seal for Communications for its 2001 Quarterly
AEGON USA staff also supported Habitat for Humanity, a charitable program providing housing for people in destitute circumstances the world over. At Cedar Rapids, AEGON volunteers completed three Habitat projects. Elsewhere in the Group, employees volunteered to maintain homes for limited income seniors and disabled homeowners.
Comprises permanent and term life insurance. Permanent life insurance provides life-long financial protection. Most permanent policies have a cash value feature with minimum rate guarantee that accumulates tax-deferred, over the life of the policy and can be used to help fund financial goals particularly in retirement. Whole life insurance is a common form of ploicy where premiums remain constant over the life of the policy.
Fixed annuities have a specified rate of interest that can be reset periodically.
Investor concerns over the equity market also contributed to record sales of structured settlement annuities during the year. Transamerica Capital also bucked the industry’s weak equity sales trend in the brokerage channel through strong wholesaling efforts, quality products and a highly recognizable brand. Finally, Transamerica Investment
During 2001 the operating results were negatively affected by the exiting business lines, the slowing economy and the events of 11 September. Yet, the remaining clearly focused businesses are expected to profit from fundamental improvement and developments.
In the asset management field AEGON The Netherlands was, like all other investment institutions, affected by depressed equity markets. But its relative performance was strong and
Scottish Equitable continued to focus on IFAs as its preferred distribution channel for investment and protection sales. Despite a slow start and tight controls on charges, the stakeholders pension initiative provided a strong stimulus for group pension market.
Under government encouragement, defined benefit plan sponsors began to reduce the traditionally high exposure to equities in favor of more risk-averse assets with higher yields. A surge in pension fund demand for corporate bonds has been fuelled by fears of a slowdown, impending regulation and demographic shifts.
During 2001, AEGON Hungary took a number of steps to boost profitability, including de-emphasizing low-margin single premium life and unprofitable general insurance segments. Notwithstanding substantial flood loss claims in 2001, AEGON Hungary now enjoys a dominant share of insurance industry profits in Hungary. To improve customer service and leverage the high morale and effectiveness of sales staff, the call center was taken in-house after extensive staff retraining.
● The effect on net income growth of the JC Penney’s direct marketing insurance operations acquisition, the removal of the cap on indirect return, and currency translation amounts to 4%, 3% and 2% respectively. On net income per share, the effect is 2% each.
Actuarial assumptions and their sensitivities underlie the calculation of technical provisions, which are based upon generally accepted reserve valuation standards. In the normal course of business, assumptions regarding mortality, longevity, investment returns, lapses and other relevant parameters are reviewed annually and updated when appropriate.
Most of the credit risk taken by the AEGON Group resides with AEGON USA. AEGON USA applies exposure limits, contingent upon the respective counterparty credit rating. Exposures include derivatives exposures as well.
Under certain circumstances, AEGON takes credit exposure through credit derivatives. The total underlying amount of these credit derivatives is very small relative to the entire portfolio and amounted to around EUR 100 million at 31 December 2001 for the AEGON Group.
To facilitate the debt funding related to the Transamerica acquisition, AEGON founded AEGON Funding Corp. during 1999 and AEGON Funding Corp. II in 2000. Funding raised by these entities enjoys a full and unconditional guarantee from AEGON NV. AEGON Funding Corp raises funds through a USD 4.5 billion Global Commercial Paper program. In addition, AEGON Funding Corp. II issued EUR 350 million of 4.75% bonds due in 2005. AEGON NV accessed the perpetual debt market in the Netherlands by increasing its EUR 450 million 6.875% Perpetual Subordinated
Both these publications are now available on our corporate web site, which contains investor information and press releases in browsable and downloadable formats.
–822 –769 Corporation tax 11 –918 –833 64 56 Net income unconsolidated group companies 12 72 60 1.58 1.45 Net income per share 1.76 1.57 1.57 1.43 Net income per share fully diluted 1.75 1.55
Disposed and redeemed 2,986 7,346 Real estate and shares 3,335 7,955 1,044 1,269 Shares of group companies and subsidiaries 1,166 1,374
Since the introduction of the indirect return method by AEGON in 1995, the method became an accepted accounting policy in the insurance industry in the Netherlands. In 1997 AEGON has put a cap of 7% after tax on the indirect return. As announced in the annual report 2000, to bring the application of this method in line with current general practice, the cap on indirect return has been removed in 2001. The positive impact on 2001 pretax earnings amounted to EUR 72 million. For detailed information re the capital gains on real estate and shares refer to page 90.
The coupons for the EUR 114 million 8% bonds are set at 8% until 8 June 2005. The coupons for the EUR 203 million 71/8% bonds are set at 71/8% until 4 March 2011, while the EUR 136 million 71/4% bonds are set at 71/4% until 14 October 2008. On these dates, and after every consecutive period of ten years, the coupons will be reset at the then prevailing yield of nine-ten years Dutch government bonds plus a surcharge of 0.85%. The coupons of the other four loans are fixed.
The market value of these loans amounts to EUR 1,584 million (2000: EUR 1,356 million).
Balance at 1 January 432 486 Rebates granted during the year 94 61 Amortization charged to the income statement –102 –118 Other changes 0 3
Net balance at 31 December: — current year 520 931 — prior years 1,392 883
Under interest rate swaps, the Company agrees with other parties to exchange, at specific intervals, the difference between fixed rate and floating rate interest amounts calculated by reference to an agreed notional amount without an exchange of the underlying principal amount. The differential to be paid or received is recognized as an adjustment to interest expense.
Bonds and registered debentures 855 739 Private placements 1 35 Ceded and securitized mortgage loans 2,173 2,283 Letters of credit 1,513 1,284
Amortization of interest rate rebates 102 118 Surplus interest bonuses 40 48 Profit appropriated to policyholders 106 204
Deferred policy acquisition costs –2,256 –302 –2,558 Amortization of deferred policy acquisition costs 1,203 219 1,422
Commercial lending 87 139 Leasing –12 8 Real estate information 42 24 Other 8 –18
Pension expenses –6 –4 Social security charges 15 18 Other employee costs 37 64
High yield (BB+ or less) 4,321 41 0 10 4,694 5
AEGON Asset Management UK plc, London AEGON UK plc, London Guardian Assurance plc, Lytham St Anne’s Guardian Linked Life Assurance Limited, Lytham St Anne’s Guardian Pensions Management Limited, Lytham St Anne’s HS Administrative Services Limited, Chester Scottish Equitable plc, Edinburgh Scottish Equitable International Holdings plc, London
Balance at 1 January 524 674 Repayments or payments received –89 –150
Balance at 1 January 1,350,523,905 668,426,144 Stock split — 668,426,144 Issuance of shares 55,000,000 — Stock dividend 16,484,329 13,194,117 Exercise of options 245,000 477,500
The fair value of the stock options and stock appreciation rights granted during the year amounts to EUR 83 million (2000: EUR 74 million). This value was estimated using the binominal option pricing model, taking into account that the options granted cannot be exercised within the first three years.
Vereniging AEGON is the continuation of the former mutual insurer AGO. In 1978 AGO was demutualized and Vereniging AGO became the only shareholder of AGO Holding N.V., which was the holding company of its insurance operations. In 1983 AGO Holding N.V. and Ennia N.V. merged into AEGON N.V. Vereniging AGO initially received approximately 49% of the common shares (which shareholding was reduced gradually to 40%) and all of the preferred shares in AEGON N.V., giving it voting majority in AEGON N.V., and it changed its name into Vereniging AEGON.
Stock dividends received 6,324,785 Purchase price of EUR 32.04 per share 11,288,800
We have audited the financial statements of AEGON N.V., The Hague, for the year 2001. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
Balance of other items –828 202 –410 242 Certain expenses are recorded in different periods on the two bases of accounting