Aegon to Cut 5% of US Work Force, Stop Sales of Bank-Owned, Corporate-Owned Life Insurance
December 3, 2010 by Fran Matso Lysiak
Symbols: AEG
THE HAGUE, Netherlands, Dec 02, 2010 (A. M. Best via COMTEX) —
Aegon NV said it will cut about 5% of its U.S. work force over the next two years as it will stop new sales of executive non-qualified benefit plans and related bank-owned and corporate-owned life insurance in the United States. Most of those operations are in Dallas.
The Netherlands-based Aegon also said it will consolidate operations, which include certain asset management functions that are based in Louisville, Ky., with other U.S. locations. It also will consolidate and outsource some back-office activities now done in Cedar Rapids, Iowa.
The work force reduction impacts about 400 to 500 employees total. The actions will result in a one-time charge of about $80 million, of which $60 million will be charged in the fourth quarter, and $20 million in 2011, Aegon said.
The move is consistent with its focus on its core business — life insurance, pensions and asset management, the company said.
Over the past two years, in a challenging business environment, Aegon has taken a number of steps in the United States, in Europe and Asia to improve business performance , lower expenses “and sharpen our focus on core businesses,” said Cindy Nodorft, a spokeswoman for Aegon companies in the United States, in an e-mail.
“This ongoing portfolio review has resulted in evaluating the markets we serve, the particular businesses we are in and to determine if they contribute to Aegon’s long-term strategic objectives,” she said. The company concluded the BOLI/COLI market “is not a fit strategically to our core activities of life insurance, pensions and asset management,” Nodorft said. Aegon will wind down this business over time, she said.
The BOLI/COLI business is conducted primarily by Clark Consulting LLC, she said.
After the restructuring is completed, these changes will result in an annual cost savings of about $70 million, Aegon said.
“We will be working with our employees and consultants to ensure the same level of quality service for our clients and to create transition plans for those clients affected by the decision,” Nodorft said.
In September, as part of an ongoing cost-cutting effort, Aegon said it would close two businesses in the United Kingdom and cut costs 25% while focusing on its core life insurance and protection segments. It would close its U.K. third-party pension administration and its employee benefits software businesses (BestWire, Sept. 28, 2010).
Transamerica Life Insurance Co. and Transamerica Financial Life Insurance Co., both members of Aegon USA Group, each currently have a Best’s Financial Strength Rating of A+ (Superior).
(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)
