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The Hague, March 11, 2004
Dear reader,
On behalf of the Executive Board, I am pleased to present AEGON's 2003 annual report. Following a year that challenged the insurance industry as a whole, AEGON, demonstrating its resilience, performed well in 2003. We are well-positioned to take advantage of a return to a more stable market environment.
Financial results for 2003 demonstrated the overall progress that has been made during the year. Full year earnings and life production showed good growth. Furthermore, the divestiture of most of Transamerica Finance Corporation's business reinforced our focus on core life activities.
The principles of our strategy and objectives are clear. AEGON will continue to focus on life and pension products in both its existing and selected new markets. We are committed to a decentralized structure that provides substantial autonomy for local operations, enabling all our businesses to organize themselves around the demands of their customers. We will seek a leading position in each of our chosen markets to generate benefits of scale, combined with profitable and sustainable growth.
Distribution continues to be the cornerstone of AEGON's overall business. Significant progress was made during the year in expanding our multi-channel distribution systems. While multi-channel distribution has been a particularly important growth driver in the United States and Taiwan, it has also become an increasingly important aspect of distribution activities in our other country units. 2003 not only saw the expansion of AEGON's distribution channels in the United States, but also the acquisition and integration of a number of brokers in the Netherlands and independent financial advisor firms in the United Kingdom.
Bank distribution partnerships also represent an opportunity to extend our reach and the partnership with Caja de Ahorros del Mediterráneo, one of the largest savings banks in Spain, is an important development. We will continue to develop distribution partnerships in those markets where it makes strategic sense to do so.
I am also pleased to report increased authority of AEGON's common shareholders as a result of the modernization of AEGON's corporate governance. In addition, the recent introduction of the Dutch Corporate Governance Code is an important step forward in improving the accountability of companies registered in the Netherlands. AEGON is committed to the highest standards of transparency and we welcome the adoption of the principles of the code.
Although the continued low interest rate environment and weak US dollar are not helpful, it will not change the direction of our business. Rising bond yields, combined with lower bond defaults and the upward momentum of equity markets, as well as growth in the United States economy, are significant factors that are beginning to have a positive impact on our business.
AEGON has a leading position in an industry that is demonstrating real evidence of recovery after an unprecedented period of challenges in the financial markets. With focused execution of our growth strategy, we look to 2004 as a year in which AEGON will create value for all stakeholders.
Thank you for your support and interest in AEGON. I hope our 2003 annual report proves to be a valuable resource for you.
Yours sincerely,
Donald J. Shepard
Chairman of the Executive Board
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