EDINBURGH, February 15 -- AEGON UK boss Adrian Grace has said the uncertainty about Brexit has not made the pensions and investments group less likely to invest in the country, where it has good growth prospects.
Speaking after the business he leads posted a 10 per cent increase in annual underlying earnings, to €128 million (£113m), from €116m, Mr Grace said the Dutch group that owns it remains very committed to the UK. With around 1,200 employees in Edinburgh, Aegon is a major financial services sector player in Scotland. A further 800 employees are transferring to Atos in Edinburgh under an out-sourcing deal agreed in November. Expressing confidence that directors in Holland would support expansion moves in the UK, Mr Grace said: “I’ve never been told they would not make more money available in the UK, quite the reverse. They are encouraging me to build and diversify.” He said Aegon may consider returning to the acquisition trail in the second half of the current year as it moves to draw a line under the problems that followed the bumper takeover of Cofunds in 2016. The £140m deal helped make Aegon UK a major player in the platform market to provide web-based facilities which people can use to help manage their savings for retirement. The company was left facing expensive complications after migrating 400,000 Cofunds retail customers on to its systems over the May Bank Holiday weekend.
In August Mr Grace said Aegon UK had been required to put more than 200 people on to clearing backlogs and dealing with service issues. Aegon UK incurred around £30m integration costs in the second half, including undisclosed amounts of compensation paid to customers of Cofunds and advisers. However, annual cost savings following the integration of Cofunds are expected to reach £60m. Mr Grace said yesterday: “Between July and December significant strides were made and resource mobilised to address service issues. By the end of the year core operational services had returned to target levels.” He said the fact the UK business pays regular dividends to the Dutch parent showed its investment in the country was paying off.
The deal agreed with Atos was the final piece in the jigsaw in terms of developing a business model fit for the twenty first century. Atos will take over administration of traditional-style policies in the UK for Aegon, which bought Scottish Equitable in 1994. Mr Grace noted the jobs of the 800 employees affected have been guaranteed for a year under the deal. The arrangement leaves Aegon UK, which also employs around 1,000 in England, to focus resources on growing in the platform market. Mr Grace said Aegon’s enthusiasm for the UK has increased in recent years, noting: “Nine or ten years ago I think there were questions about Aegon’s commitment to the UK.” Mr Grace said Aegon had had a small market share and a very capital-intensive business model with no real strategic outlook on where it was going. Today it has a 25% market share of the platform market and a clear strategy. Demand for platform services is growing as people take more responsibility for saving for retirement.
Mr Grace said Aegon UK’s focus in the first half will be on completing the integration of Cofunds and a business acquired from BlackRock in 2016.
In Aegon group’s results announcement chief executive Alex Wynaendts said he was pleased service levels in the UK platform business had returned to target levels. The group said lower Retirement Plans earnings in the US had more than offset business growth and higher margins in Europe, and cost savings. Annual earnings fell 3% to €2.07bn. Mr Grace succeeded Otto Thoresen as chief executive of Aegon UK in 2011 as the company completed an overhaul that led to the loss of around 600 jobs in Edinburgh. He joined Aegon UK as business development director in 2009 after holding senior banking and insurance roles at HBOS and Barclays.