Group Chief Executive David Henderson has today outlined his ambitions to propel AEGON UK to be a top 5 player in the life and pensions industry over the next 5 years. AEGON UK currently ranks 9th in the UK in terms of new business generation.
Â· Large scale investment in technology - operating cost reductions of Â£40 million by 2003
Â· Top 5 position short to medium term goal
Â· Change in balance of jobs in Group
Â· Strategic Investment in Distributor firms to continue - key shareholding in AssureWeb announced
AEGON UK has invested over Â£100 million in technology in the last 3 years and anticipates that this will lead to a reduction in its cost base of Â£40 million per annum from 2003. Over the same period new premium production has soared 20% per annum on average.
The company is breaking its strategy into two components:
- Strong organic growth of its existing established businesses - concentrated on the pensions, investments and protection markets. The company is bullish over future opportunities to feed its growth. However this must be achieved in a climate of volatile stock markets and continued pressure on profit margins.
- Future opportunities. AEGON UK will continue its program of buying and building distribution capability. This follows recent purchases of Independent Financial Adviser (IFA) firms Wentworth Rose (50%), Advisory and Brokerage Services and Momentum adding over 150 financial advisers and 400 staff in total to the company. It expects to add further acquisitions in the distribution area over the next 6 months or so. In a separate announcement today AEGON UK has announced a key shareholding in AssureWeb - the e-trading portal for IFAÂ's.
David Henderson, Group Chief Executive, said:
'This is a particularly challenging time for our industry with stock market pressures squeezing profit margins and a large number of regulatory reviews likely to have a significant influence on the way that financial services companies conduct business and sell products in the future. This is core to the financial model and vision for our business over the next few years.
We are already in a strong and healthy position but we need to shape up further in order to ensure that we achieve our key strategic and financial objectives. If we are to realise our strategic vision this means becoming a leaner fitter and more efficient organisation that can capitalise fully on expected future opportunities
Our significant investment in technology in the business will eliminate operating costs in the order of 15% by the end of 2003. These savings will be achieved through a variety of measures - primarily through a mixture of changes to our processes and efficiencies in how we organise our businesses. We are seeing significant benefit in our technology investment, which is changing the number and, type of jobs in our organisation. It is also leading to improvements in service quality and speed of turnaround. We are introducing large numbers of new staff to the Group - in the order of 500-600 - but the changing shape of our business will mean that we will not require the same number of staff in our other activities. I would anticipate that the majority of jobs affected here will be covered by normal turnover, early retirement and voluntary redundancies.
I anticipate the net effect of our 2002 activities to have us operating in 2003 with the same total workforce as we began this year with.
I have a solid perspective on organic growth of all our existing businesses and to capitalise fully on future opportunities that legislative or market change may present. There is little doubt that consolidation in the financial services industry is going to continue apace leaving a small group of winners and AEGON UK will be one of those winning companies. In this environment I want AEGON UK to be seen as a leader of change'
AEGON UK has assets of Â£32 billion and is part of the AEGON Group one of the largest and financially strongest financial services organisations in the world. The AEGON Group has assets of Â£185