AMSTERDAM (Thomson Financial) - Aegon NV said it will target average net underlying earnings growth of at least 10 percent per year to 2012 in a new long-term growth strategy that will include divestments and the reallocation of capital.
The Dutch insurer also said it will target a return on equity of at least 14 percent by 2010 and at least 15 percent by 2012 compared with 12 percent in 2007.
Chief executive Alex Wynaendts later gave details via conference call of the company's ambitious profit growth targets, which will be achieved through selling non-core, non-performing assets, as well as by improving growth and returns from existing businesses and running the company as an international group.
'We cannot say more on that as we are still looking at all our businesses but I can say that there will be no sacred cows. If a company is not performing, then it will go out,' Wynaendts said.
'Is it core? Does it fit with our strategy, in terms of growth return, and in relation to the risk? and cash flow criteria? We will looking at all this when we look to divest, or to buy for that matter,' the CEO said.
Wynaendts said Aegon wanted to 'find the right balance' for the whole group and that this whole strategy was about that.
He said the company expects to raise 2 to 3 billion euros within the next five years through reallocating capital, with another 2 billion in cost savings within the same time frame through improving its risk profile and risk pooling infrastructure.
Wynaendts said Aegon will target accelerated growth in new markets, with an allocation of more than 50 percent of the group's capital outside the United States by 2012.
Currently, 60 percent of the company's business is in the U.S.
'We want to use our position in the U.S. to strengthen ourselves in Europe and in Asia,' Wynaendts said.
In the U.K., Aegon's existing strategy of diversifying product ranges and distribution 'will remain the same,' Wynaendts said.
In the Netherlands, Aegon wants to maintain its cash flow generation but increase profile growth.
'Towards this end, the new CEO of our Dutch operations Marco Kelm will present plans in November,' Wynaendts said.
In Spain, Aegon has been successful in bancassurance so the group will look there for acquisitions, 'but only if they drive leadership in a successful market,' Wynaendts said.
The CEO said the Ukraine's current pension reforms make this a good time to enter that market.
He said Aegon also was looking toward developing businesses in Japan and India.
For Aegon's Latin American operations, the CEO spoke about Mexico and repeated that the company will pursue entry into new markets and build scale, as long as the the opportunities are 'right'.
For Aegon as a group, the CEO said the plan includes the broadening of the role of management. Aegon has a new manager for its Dutch operations in Marco Kelm, but also a new manager for its new global asset management team, Erik van Houwelingen and Gabor Kepecs, the CEO for central and eastern Europe.
When asked if the 'worst was over' for the general economy, Wynaendts said he thought it was, although he said there would still be much volatility in the markets. He added that the recent economic crisis had had no negative effect on sales.
When asked about possible share buybacks, the CEO said that while Aegon had excess capital -- 1.5 billion euro at the end of the first quarter -- it would hold this money as a buffer against turbulent times. Cornelia Messing; cornelia.messing@thomsonreuters.com agb/cmm/vs/vs COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
© 2008 AFX News
