's [see profile
] parent is making cuts in the U.S., but it's clear whether or not the mutual fund firm will be affected. On Wednesday Aegon
revealed that it plans to cut between 400 and 500 jobs in the U.S. (i.e. about five percent of its workforce here) over the next two years.
To that end, Aegon plans to: stop selling non-qual plans, bank-owned corporate life insurance and corporate-owned life insurance (BOLI and COLI); combine its Louisville, Kentucky operations with other locations; and outsourcing or redirecting back office work handled in Cedar Rapids, Iowa. Aegon expects the cuts to cost about $80 million in one-time expenses ($60 million by the end of 2010 and $20 million next year), against about $70 million in annual savings.
"Key to Aegon's long-term strategy is the need to focus on our core activities and identify ways to better leverage resources and capture efficiencies, as evidenced by our decision to consolidate operations," stated Aegon Americas CEO Mark Mullin
Watch for more details on the cuts to come out next week at Aegon's Analyst & Investor Conference in New York on December 7 and 8.
Company Press Release
Consistent with its strategic focus on its core business – life insurance, pensions and asset management - AEGON will discontinue new sales of executive non-qualified benefit plans and related Bank-Owned and Corporate-Owned Life Insurance (BOLI/COLI) business in the United States. The majority of the operations of this business are located in Dallas, Texas.
In addition, AEGON will pursue further operational and cost efficiencies by consolidating its operations currently based in Louisville, Kentucky with other existing US locations. There are several business units represented in Louisville, as well as a number of corporate and select functions of AEGON Asset Management. Additional efficiencies are also being captured through the consolidation and outsourcing of certain back office activities currently carried out in Cedar Rapids, Iowa.
As a consequence of the announced actions, AEGON will reduce the number of employees in its US operations by 400 to 500 over the next two years, representing approximately 5% of its US workforce. These actions will result in a one-time restructuring charge of approximately USD 80 million, of which USD 60 million will be charged in the fourth quarter this year and USD 20 million in 2011. In addition, AEGON’s decision to wind-down its BOLI/COLI business is expected to result in a write-off of goodwill and other intangible assets of approximately USD 210 million. After full implementation of the restructuring, these organizational changes will result in annual cost savings of approximately USD 70 million.
In 2009, underlying earnings before tax from BOLI/COLI amounted to USD 47 million. As of the first quarter of 2011, earnings from the BOLI/COLI business will no longer be reported in underlying earnings but in the run-off category.
“Key to AEGON’s long-term strategy is the need to focus on our core activities and identify ways to better leverage resources and capture efficiencies, as evidenced by our decision to consolidate operations,” said Mark Mullin, a member of AEGON’s Management Board and CEO of AEGON Americas. “The decision to exit the executive non-qualified benefit space and related BOLI/COLI market is consistent with this focus. We have concluded that over the long-term there is only a limited strategic fit between this business and AEGON’s core business. We remain committed to providing existing customers the same level of quality service they have come to expect.”
Further details of AEGON’s progress in the execution of its strategy in the United States and its other markets will be provided during AEGON’s Analyst & Investor Conference, December 7 and 8, 2010 in New York City.
Neil Anderson, Managing Editor
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