Aegon NV (AEG) yesterday repaid €1.15 billion of government funds. The payment constitutes about one-third of the total €3.0 billion it received during last fall. The amount repaid also included accrued interest of €44 million from May 22.
The payment, which is an initial step towards full loan repayment, will save interest at 8.5% per year. Full repayment of funds could help ease some of the government scrutiny over the company’s operations, including pay restrictions and decisions such as acquisitions and share repurchases.
Aegon, which derives more than half of its pre-tax operating profit from the United States, had been hurt by the collapse of the subprime mortgage market, where it had significant investments. The company first announced its intention to repay the Dutch State in August, when it raised €1 billion in a successful equity issue.
In an attempt to boost the ailing financial markets, the Dutch government last year announced to inject €20 billion to boost bank capital and liquidity.
Other than Aegon, Fortis and ING Group (ING) received cash injections of €16.8 billion and €10 billion, respectively, from the Dutch government.
During the third quarter 2009, Aegon reported an increase in its net profit to €145 million from a loss of €329 million last year, mainly on the back of fewer investment losses. At the end of the quarter, shareholders’ equity was €11.6 billion.
As of Nov. 2009, Aegon had more than 40 million clients worldwide, mainly in the United States, the United Kingdom and at home in the Netherlands. It employs approximately 30,000 people.
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