As part of an ongoing restructuring program along with efforts to improve profitability, AEGON NV (AEG) plans to close its two businesses and slash jobs in the United Kingdom.
 
According to the program, Aegon will shut down its UK third-party pension administration and its employee benefits software businesses, as it foresees a difficult environment in the UK. Aegon will now diversify its energies in its at-retirement and workplace-savings markets. Further, Aegon will retain its closed book of business at Guardian Financial Services as it provides strong cash inflows for the company.
 
Additionally, Aegon will streamline its management by eliminating 82 employees at its third-party-pension-administration unit and 7 at its employee-benefits-software units as part of its cost-cutting strategies. Aegon is also planning to reorganize its board and implementing lay-offs at the senior level and the unionized staff, though the company has not stated the number of job cuts.
 
Aegon has been using a wide range of cost-saving measures within the UK since June 2008. Aegon projects cost reductions of 25% by the end of 2011 and expects its UK life and pension operations to boost return on capital to as much as 10% by 2014 from 2.7% in 2009.
 
Aegon has already moved ahead with its plans in early September, including the closure of its group risk business, its withdrawal from the bulk annuities market and the reorganization of the company’s UK sales division. These measures have eliminated 106 jobs at Aegon UK.
 
Besides, Aegon is attempting to harness its operating efficiency by focusing on its core operations such as life insurance, pension and asset management, and also seeking strategic options for its Transamerica Reinsurance business that could even include a sale.
 
Aegon is also seeking to reallocate capital to growth markets in Central and Eastern Europe, Asia and Latin America to achieve greater geographical balance.
 
Further, by the end of 2011, Aegon needs to pay off its remaining €1.5 million out of the €3.0 billion it had borrowed from the Dutch government during the financial crisis. We believe that the company should maintain a substantial cash buffer to repay the remaining amount.
 
We believe that Aegon is continuing to work on its long-term strategic priorities to reallocate capital toward business with higher growth and good return prospects, in order to improve growth and returns from its existing businesses and to reduce financial market risk.

(We are reissuing this article to correct a mistake. The original article, issued earlier today, should no longer be relied upon.)
 
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