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Challenging conditions

Aegon restores service level as group profits slump

Adrian GracePensions company Aegon has restored service levels following problems migrating former Cofunds users to its platform in May.

Adrian Grace, chief executive, (pictured) said that between July and December “significant strides” were made and resources thrown at addressing service issues.

“By the end of the year core operational services had returned to target levels,” he said in the Edinburgh-based company’s half-year statement.

“The focus now for the Aegon Platform is on ensuring we provide the enhancements that advisers have requested and migrating the Nationwide book of business. We are clear on the functionality that needs to be prioritised for the coming months and beyond this have a continual programme of improvements planned for the service.”

Mr Grace said that in the second half of 2018 the business also focused on extending the relationship with Atos which currently services Aegon’s 500,000 protection customers. The firm announced a 15 year contract for Atos to service and administer existing customers which it hopes will improve customer service for around 1.4 million customers with a multitude of different policy types.

Financial performance and strategy

The restoration of service performance in the UK business came against a difficult trading period for the group which reported an 8.1% drop in underlying pretax profit for the second half of 2018, missing estimates. It came in at €1.01 billion for the six-month period ended 31 December.

Net profit fell 83% in the second half of 2018 after a challenging period in which the company was hit by market turmoil.

The Dutch insurance and asset-management company said it made a net profit of €253 million compared with €1.45 billion in the year-earlier period.




Group CEO Alex Wynaendts said in a statement: “The second half of 2018 was challenging, as we experienced a significant decline in the markets towards the end of the year.

“This affected the value of our customers’ investments, and thereby, the results of our administration and services businesses.”

In the second half of the year Aegon UK delivered earnings of £53m taking it to £110m for the year as a whole. Total assets under administration reached £158.5bn, with platform assets totalling £128bn.

Mr Grace said: “This was a strong performance against a backdrop of relatively volatile stock markets, and a slowdown in the DB transfer market and reflects both the diversified nature of Aegon’s business and a consistent strategy in our core markets.

“As an intermediated business, our focus is firmly on supporting the needs of advisers and their individual and employer clients, by providing pensions, investments and protection products through our digital platform services.” 

Workplace savings

Mr Grace said there is “significant momentum” behind Aegon’s workplace savings business following the completion of its acquisition of BlackRock’s defined contribution business last year.

The large scheme specialist capability acquired complements Aegon’s existing workplace savings and wealth credentials.

“We expect the workplace business to benefit both from rising pension contributions associated with auto-enrolment, the continued trend from single employer to master trust schemes which are increasingly popular with employers and their advisers and the continued move away from defined benefit provision.




“2019 will represent a major milestone for the master trust market with all trusts having to gain authorisation from the Pensions Regulator to ensure they meet new standards.

“Securing this authorisation is one of our priorities for the year along with building on initiatives to better engage workplace savers with their pensions through a combination of proposition enhancements and communications campaigns.”

Protection

The digitisation of Aegon’s protection service in the first half of 2018 has made it simpler and quicker for advisers to apply for cover for their clients and has led to a significant uptick in business, said the company, with new customer numbers up 36% in 2018 compared with the previous year.

Regulatory focus

Mr Grace added: “With individuals increasingly expected to plan for their own financial futures, against a backdrop of political and economic uncertainty, we are seeing a split between the haves and the have nots – those with and without access to an adviser.

“In recent regulatory reviews including on pension freedoms and investment platforms, the FCA’s main focus has been on new interventions to protect those who go it alone without advice. While these protections are important, I’d much rather see the regulator focus on how to give more people access to the financial advice they need to optimise their future financial wellbeing.

“The Financial Advice Market Review, a previous Government / FCA initiative to ‘close the advice gap’ is being reviewed later this year and all parties need to work together to look for ways to truly deliver on what has proved an elusive, but very important goal.  “



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