Embedded Value Per Share Increased to EUR 13.44 - up 2% and 10% on Constant Currency
07 May 2008 - 3:50PM
PR Newswire (US)
THE HAGUE, Netherlands, May 7 /PRNewswire-FirstCall/ -- AEGON has
long used embedded value as a management tool for its life
insurance operations. AEGON's management believes that embedded
value, in conjunction with other publicly disclosed financial
information, can provide valuable additional information for
analysts & investors to assess a reasonable range of values
inherent in the business. The disclosure includes sensitivity
analyses reflecting certain risks and drivers of the realization of
embedded value. Embedded value life insurance is an estimate of the
economic value of a company's existing life insurance business and
is to a large extent actuarially determined. The embedded value of
a life insurance company includes its invested capital plus the
present value of future profits minus the cost of holding the
required capital. Embedded value life insurance should not be
viewed as a substitute for AEGON's primary financial statements.
The embedded value (EV) as reported today demonstrates both solid
performance of the in-force book, as well as continued successful
focus on profitable new business. EV reflects growth across all
country units, although growth was more than offset by currency
effects. The embedded value life insurance (EVLI) was down slightly
at EUR 25.9 billion. The EVLI benefited from the increased value of
new business of EUR 0.9 billion, the performance of the in-force
book of EUR 1.4 billion, a change in economic assumptions of EUR
0.9 billion, offset by negative currency translation effects of EUR
2.0 billion and lower than expected investment returns of EUR 1.2
billion. Net capital movements out of the life operations reduced
EVLI by EUR 2.0 billion. At year-end 2007, the total embedded value
(TEV) amounted to EUR 21.7 billion, a decrease of 3% compared to
2006, but up by 4% on constant currency. Adjusted for the value of
AEGON preferred shares, the total embedded value per common share
amounted to EUR 13.44, an increase of 2%. Jos Streppel, CFO and
member of the Executive Board, said: "AEGON performed solidly on an
operating basis both on the in force book as on new business and
the decrease in embedded value is mainly the result of a weaker US
dollar and British pound. The share buy back that AEGON completed
successfully in 2007 has increased the embedded value per share."
During 2007, as part of a share buy back program of EUR 1 billion
AEGON bought back 74,569,902 of common shares. This represents 4.6%
of AEGON's issued and outstanding common shares and 4.0% of AEGON's
total issued and outstanding share capital. Both the share buyback
and the weakening of currencies, in particular the US dollar and
British pound, had a negative impact on TEV. On a constant currency
basis, TEV would have increased 4%. Allowing for the share buyback,
on a constant currency basis, TEV was up 8%. Embedded value
Year-end Year-end(A) (amounts in millions unless stated 2007 2006
otherwise, after tax) EUR EUR % Life business Adjusted net worth
(ANW) 11,751 14,777 (20) Free surplus (FS) 1,025 2,766 (63)
Required surplus (RS) 10,725 12,011 (11) Value of in-force life
business (ViF) 4,138 12,515 13 Present value future profits (PVFP)
17,127 15,679 9 Cost of capital (CoC) (2,989) (3,164) (6) Embedded
value life insurance (EVLI) 25,889 27,292 (5) Other activities IFRS
book value 191 642 (70) Total embedded value before holding
activities 26,079 27,934 (7) Holding activities (4,385) (5,517)
(21) Market value of debt, capital securities & other net
liabilities (4,063) (5,177) (22) Present value holding expenses
(322) (340) (5) Total embedded value (TEV) 21,694 22,418 (3) Value
of preferred share capital (1,527) (1,547) (1) Total embedded value
(TEV) attributable to common shareholders 20,167 20,871 (3) TEV
attributable to common shareholders per share (EUR) 13.44 13.19 2
(A) 2006 numbers were changed to reflect the retrospective
application of an accounting change. This table provides a summary
of AEGON's key 2007 embedded value figures. These should be read in
conjunction with the detailed information on embedded value life
insurance and total embedded value in the report that is available
on http://www.aegon.com/. AEGON is one of the world's largest life
insurance and pension groups, and a strong provider of investment
products. AEGON empowers local business units to identify and
provide products and services that meet the evolving needs of
customers, using distribution channels best suited to local
markets. AEGON takes pride in balancing a local approach with the
power of an expanding global operation. With headquarters in The
Hague, the Netherlands, AEGON companies employ approximately 30,000
people worldwide. AEGON's businesses serve millions of customers in
over twenty markets throughout the Americas, Europe, and Asia.
Respect, quality, transparency and trust constitute AEGON's core
values as the company continually strives to meet the expectations
of customers, shareholders, employees and business partners. AEGON
is driven to deliver new thinking with the ambition to be the best
in the industry. Cautionary note regarding Regulation G (non-GAAP
measure) This press release includes a non-GAAP financial measure.
Embedded value is not based on IFRS, which are used to prepare and
report AEGON's 2007 financial statements and should not be viewed
as a substitute for IFRS financial measures. In the 2007 Embedded
Value report available on http://www.aegon.com/, the embedded value
life insurance and the total embedded value are reconciled to
shareholders' equity of EUR 15.2 billion as reported in AEGON's
annual accounts over the year 2007. AEGON believes the non-GAAP
measure shown herein, together with the GAAP information, provides
a meaningful measure for the investment community to evaluate
AEGON's business relative to the businesses of our peers. Local
currencies and constant currency exchange rates This press release
contains certain information about our results and financial
condition in USD for the Americas, GBP for the United Kingdom, HUF
for Hungary and NTD for Taiwan because those businesses operate and
are managed primarily in those currencies. Certain comparative
information presented on a constant currency basis eliminates the
effects of changes in currency exchange rates. None of this
information is a substitute for or superior to financial
information about us presented in EUR, which is the currency of our
primary financial statements. Forward-looking statements The
statements contained in this press release that are not historical
facts are forward-looking statements as defined in the US Private
Securities Litigation Reform Act of 1995. The following are words
that identify such forward-looking statements: believe, estimate,
target, intend, may, expect, anticipate, predict, project, counting
on, plan, continue, want, forecast, should, would, is confident,
will, and similar expressions as they relate to our company. These
statements are not guarantees of future performance and involve
risks, uncertainties and assumptions that are difficult to predict.
We undertake no obligation to publicly update or revise any
forward-looking statements. Readers are cautioned not to place
undue reliance on these forward-looking statements, which merely
reflect company expectations at the time of writing. Actual results
may differ materially from expectations conveyed in forward-looking
statements due to changes caused by various risks and
uncertainties. Such risks and uncertainties include but are not
limited to the following: - Changes in general economic conditions,
particularly in the United States, the Netherlands and the United
Kingdom; - Changes in the performance of financial markets,
including emerging markets, such as with regard to: - The frequency
and severity of defaults by issuers in our fixed income investment
portfolios; and - The effects of corporate bankruptcies and/or
accounting restatements on the financial markets and the resulting
decline in the value of equity and debt securities we hold; - The
frequency and severity of insured loss events; - Changes affecting
mortality, morbidity and other factors that may impact the
profitability of our insurance products; - Changes affecting
interest rate levels and continuing low or rapidly changing
interest rate levels; - Changes affecting currency exchange rates,
in particular the EUR/USD and EUR/GBP exchange rates; - Increasing
levels of competition in the United States, the Netherlands, the
United Kingdom and emerging markets; - Changes in laws and
regulations, particularly those affecting our operations, the
products we sell, and the attractiveness of certain products to our
consumers; - Regulatory changes relating to the insurance industry
in the jurisdictions in which we operate; - Acts of God, acts of
terrorism, acts of war and pandemics; - Changes in the policies of
central banks and/or governments; - Litigation or regulatory action
that could require us to pay significant damages or change the way
we do business; - Customer responsiveness to both new products and
distribution channels; - Competitive, legal, regulatory, or tax
changes that affect the distribution cost of or demand for our
products; - Our failure to achieve anticipated levels of earnings
or operational efficiencies as well as other cost saving
initiatives; and The impact our adoption of the International
Financial Reporting Standards may have on our reported financial
results and financial condition. Group Corporate Communications
& Investor Relations Media relations Media conference call
Phone: +31(0)70-344-8344 8:15 am CET E-mail: Audio webcast on
http://www.aegon.com/ Investor relations Analyst & investor
call Phone: +31(0)70-344-8305 or 3:00 pm CET +1-877-548-9668 - toll
free USA Audio webcast on http://www.aegon.com/ only Call-in
numbers: USA +1-480-629-1990 E-mail: UK +44-208-515-2301 NL
+31-20-796-5332 Financial supplement AEGON's 2008 Financial
supplement is available on http://www.aegon.com/ Website
http://www.aegon.com/ DATASOURCE: AEGON N.V. CONTACT: Group
Corporate Communications & Investor Relations: Media relations,
Phone: +31(0)70-344-8344, E-mail: ; Investor relations, Phone:
+31(0)70-344-8305 or +1-877-548-9668 - toll free USA only, E-mail:
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