Aegon Essay

Aegon (Aegon N.V.) is one of the biggest insurance companies in the world. As a holding company, its main activities include various financial products such as life insurance, non-life insurance, savings, pensions, and investments. Aegon is a Netherlands based company that was incorporated in 1983 and now employs around 30,000 people (as of January 1, 2008). Its headquarters is located at The Hague, the Netherlands. Aegon owns 17 offices located throughout the United States. Its principal offices are located in Baltimore, Maryland; Cedar Rapids, Iowa; Louisville, Kentucky; Los Angeles, California; Frazer, Pennsylvania; St. Petersburg, Florida; Plano, Texas; Kansas City, Missouri; Purchase, New York; and Charlotte, North Carolina. Aegon is traded on the New York Stock Exchange with the ticker symbol AEG. Aegon has approximately 27,000 shareholders (as of January 1, 2008).

In addition to the Netherlands (13 percent of the 2007 revenues), Aegon operates in the United States and Canada (73 percent of the 2007 revenues), United Kingdom (9 percent of the 2007 revenues), and Slovakia, Czech Republic, Poland, Hungary, Taiwan, and China (all comprise 5 percent of the 2007 revenues). The core business of Aegon is premium income (69 percent of the 2007 revenues). The second biggest revenue generator is investment income (27 percent of the 2007 revenues), and the commission and fee income makes 5 percent of total revenues in 2007.

Aegon operates in various product segments. These are life for account of policyholders, traditional life, accident and health insurance, fixed annuities, reinsurance, institutional guaranteed products, feeoff balance sheet products, variable annuities, general insurance, banking activities, and holding and other activities. More specifically, Aegon’s products and services include permanent and term life insurance, fixed annuities, guaranteed investment contracts, variable universal life insurance, universal life insurance, unit-linked products, variable annuities, accidental death insurance, disability insurance, dismemberment insurance, critical illness insurance, cancer treatment insurance, hospital indemnity insurance, short-term disability policies, automobile insurance, liability insurance, household and fire insurance, investment products, and savings products.

Aegon is the name of the group of companies. It has numerous subsidiary companies. Among them are Aegon USA (agency, direct marketing services, financial markets, institutional products and services, and pension); Aegon Nederlands (both the life and non-life insurance businesses and banking, financial and asset management services); and Aegon UK (manufacturer, fund manager, and distributor of pension, protection and investment products).

Aegon was formed in 1983 as a result of the merger of two Dutch insurance companies, namely AGO Holding N.V. and Ennia N.V., both of which were successors to insurance companies formed in the 1800s. In 1985, the company traded on NASDAQ National Market. Also, its shares were opened to trade at the Amsterdam, London, Basel, Geneva, and Zurich stock exchanges. In the early 1990s, Aegon increased its operations in the United States by acquiring Monumental Corporation and Western Reserve Life. Following these transactions, Aegon started to be listed on the New York Stock Exchange. Since then, Aegon continues its presence in international financial and insurance markets.

The executive team of Aegon comprises Donald J. Shepard (Chief Executive Officer), Jan Nooitgedag (Chief Financial Officer), Alexander R. Wynaendts (Chief Operating Officer). Aegon’s board of directors includes Patrick S. Baird, Otto Thoresen, Johan G. van der Werf, Dudley G. Eustace, O. John Olcay, Irving W. Bailey, Rene Dahan, Shemaya Levy, Toni Rembe, Willem F. C. Stevens, Kees J. Storm, and Leo M. Van Wijk.

Aegon’s success comes from its strong market position in various countries, which reflects its power in the insurance and pension business. It is one of the biggest insurance companies in the Netherlands and in other European countries and has a substantial presence in the United States. Another reason for its success is the growth performance in new businesses. Moreover, by engaging in new emerging markets, new businesses are expected to increase further, which in return will boost overall financial performance. Third, with its diversified business, Aegon limits its risks and manages stable revenues. By investing in different operations and in different countries, Aegon secures itself as independent of any single market. Its revenues are spread over several product segments; no single business line generates the bulk of revenues.

However, one of Aegon’s major weaknesses is that its revenues are declining in the Netherlands, which would adversely affect the performance of the company. Besides, because of higher operating expenses, Aegon faces reduced profits on its investments. Another important setback for Aegon may be its underperformed banking solutions. The company’s banking products are sold only in the Netherlands, which combined with market slowdown in the Netherlands, results in fewer earnings.

Bibliography:

  1. Aegon, www.aegon.com (cited March 2009);
  2. SEC-EDGAR, www.sec.gov (cited March 2009).

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