Aegon and EU agree to repay money
By Toby Sterling |
August 18, 2010, Wednesday
|
Print Edition
Print Edition
INSURER Aegon NV said yesterday it has reached a deal with European Union regulators on repaying 2 billion euros (US$2.56 billion) in support it received from the Dutch government at the height of the 2008 financial crisis.
Aegon said it will repay the money "market conditions permitting" by the end of 2011, including a payment of 500 million euros this month.
As part of the deal it will keep its dividends frozen and not pursue any acquisitions until the money is paid back.
Additionally, Aegon will only have to pay 800 million euros extra back to the state, instead of the 1 billion euros required under the original deal.
Chief Executive Alex Wynaendts said on a conference call the company would fund the repayments with some mix of cash, selling operations, and issuing new securities.
"We cannot rule out any options at this time," he said.
Aegon plans to sell its Transamerica reinsurance business in the United States, where it does two-thirds of its business. The division has a book value of 1.6 billion euros.
Last week the company reported second-quarter net profit of 413 million euros, from a loss of 161 million euros in the same period a year ago and up 11 percent from the first quarter.
Investors cheered the developments, and Aegon's shares rose 4 percent to 4.49 euros in early Amsterdam trading.
According to SNS Securities analyst Maarten Altena, the announcement "removes uncertainty for investors" about possible concessions the EU might demand regarding the repayment.
Aegon said it will repay the money "market conditions permitting" by the end of 2011, including a payment of 500 million euros this month.
As part of the deal it will keep its dividends frozen and not pursue any acquisitions until the money is paid back.
Additionally, Aegon will only have to pay 800 million euros extra back to the state, instead of the 1 billion euros required under the original deal.
Chief Executive Alex Wynaendts said on a conference call the company would fund the repayments with some mix of cash, selling operations, and issuing new securities.
"We cannot rule out any options at this time," he said.
Aegon plans to sell its Transamerica reinsurance business in the United States, where it does two-thirds of its business. The division has a book value of 1.6 billion euros.
Last week the company reported second-quarter net profit of 413 million euros, from a loss of 161 million euros in the same period a year ago and up 11 percent from the first quarter.
Investors cheered the developments, and Aegon's shares rose 4 percent to 4.49 euros in early Amsterdam trading.
According to SNS Securities analyst Maarten Altena, the announcement "removes uncertainty for investors" about possible concessions the EU might demand regarding the repayment.
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