|
|
 |
|
|
|
AEGON has always maintained a strong focus on cost management and efficiency, a key component to maintain long-term profitable growth. Our decentralized business model has long demonstrated its advantages in reaching customers. However, more than any other time, the current and future operating environment demands that the operating units manage and control expenses.
The goal for AEGON has always been to realize efficiency and cost benefits through outsourcing, sharing services across operating units or consolidating back-office administrative functions, while maintaining the entrepreneurial drive of sales and sales support teams in the front-office. Increasingly, the solution to these challenges has been found in internal shared service initiatives, in which business units share administrative and logistical support while the sales and marketing organizations retain the benefits of decentralization. The distinct management of the shared services strengthens operational support, encourages and allows for the utilization of best practices within the organization and permits sales and marketing managers to pursue targeted branding, product design and distribution strategies. In addition, it allows for better economies of scale across the organization.
"Our cost management activities are part of our long-term strategy, because we believe it is a continuing exercise that should be part of a growing profitable business. These goals present difficult decisions for management, but they have never been more important for the underlying growth of the business."
In 2002, AEGON again achieved improved efficiencies by streamlining and rationalizing administrative functions in almost all business units. Cost control again proved to be an important contributor to AEGON's results with the increased efficiencies providing a foundation for the future growth of the business.
On a comparable basis AEGON USA reduced its operating costs during the year while achieving strong sales growth. Its cost achievements were largely the result of shared business processes, ICT systems and centralized financial management within AEGON Financial Partners. Outsourcing, centralized purchasing and increased ICT support also contributed to the 2002 cost reduction.
AEGON Canada is providing administrative support for an affiliated business that specializes in sales of individual life and pension products through a fast-growing agency network.
AEGON The Netherlands has extended its relationship with outsourcing partners, which has improved the quality and cost-effectiveness of processing policies and claims. AEGON The Netherlands also expanded the range of administrative and technical support for independent advisors and smaller agents, helping them operate and compete more effectively through better database management and access to product support.
AEGON UK expects to achieve important cost savings in part as a result of the reduction in staffing and significant investments in technology, incurred over the last three years, coupled with administrative efficiencies.
Efficiency improvements are also being realized through information sharing within the AEGON Group. In terms of risk assessment, there is an expanded group-level review to assess and facilitate appropriate enterprise-wide exposure. Exchanges of information on technology, reinsurance, investment and other specialized aspects of insurance are carried forward by various Internal Working Groups, bringing together experts from across the AEGON Group to create more value.
Cost management and efficiency improvements do not always result from concentration. In the asset management field, a policy review has concluded that the major units should be left to pursue their distinctive models for asset liability management, reflecting regional needs, with no plans for full integration. However, the US, Dutch and UK investment units are working together to optimize the use of resources, improve coordination and reduce overlaps in research and execution of investment mandates. The goal is clear: but more than a common approach to achieve cost reduction, it also provides the added benefit of binding different parts of the AEGON Group together, creating common energy and purpose.
|
|
|
|
