Aegon to slash UK overheads and sell US reinsurance arm

SHARES in Aegon fell yesterday as investors took profits on news the Dutch company would shave a quarter from overheads in its UK arm and sell its US life reinsurance business.

The insurance group told shareholders in London it wanted to save £80m annually from its British operations by cutting costs by 25 per cent by the end of 2011. The move, which could see 600 staff from Aegon’s 2,400 employees in Edinburgh made redundant, was met with dismay from unions such as Aegis.

Aegon also said it was looking at divesting Transamerica Reinsurance, the third largest reinsurer in the US, at a book value of around €1.6bn (£1.3bn). Chief executive Alex Wynaendts said the reshuffle would help Aegon repay €2bn it still owes the Dutch government for aid during the financial crisis and re-focus its business on higher-growth markets in central and eastern Europe, Latin America and Asia.

Nick Holmes, an analyst at Nomura, said the measures would be positive as an accelerated repayment of taxpayers’ money was “one of the main potential catalysts for the stock”. William Elderkin of Citigroup said it was not clear how Aegon would go about achieving 25 per cent cost reductions in Britain, but added: “Aegon should be able to redeem its remaining €2bn Dutch government capital from internal resources.”

Shares in Aegon fell 2.7 per cent to €5 yesterday.