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INTRODUCTION
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| RESULTS OF OPERATIONS |
2003
in million
EUR |
|
2002
in million
EUR |
|
% |
|
INCOME BY PRODUCT SEGMENT
Traditional life |
1,218 |
|
1,457 |
|
(16 |
) |
| Fixed annuities |
334 |
|
174 |
|
92 |
|
| GICs and funding agreements |
213 |
|
272 |
|
(22 |
) |
| Life for account of policyholders |
378 |
|
371 |
|
2 |
|
| Variable annuities |
63 |
|
(462 |
) |
|
|
| Fee business |
6 |
|
6 |
|
|
|
| LIFE INSURANCE |
2,212 |
|
1,814 |
|
22 |
|
| Accident and health insurance |
283 |
|
278 |
|
2 |
|
| General insurance |
61 |
|
62 |
|
|
|
| TOTAL INSURANCE ACTIVITIES |
2,556 |
|
2,154 |
|
19 |
|
| Banking activities |
20 |
|
8 |
|
150 |
|
| Interest charges and other |
(429 |
|
(313 |
|
37 |
|
| Income before tax |
2,147 |
|
1,849 |
|
16 |
|
| Corporation tax |
(572 |
|
(353 |
|
62 |
|
| Transamerica Finance Corporation |
218 |
|
51 |
|
|
|
| NET INCOME |
1,793 |
|
1,547 |
|
16 |
|
INCOME GEOGRAPHICALLY
Americas |
1,538 |
|
1,206 |
|
28 |
|
| The Netherlands |
771 |
|
659 |
|
17 |
|
| United Kingdom |
188 |
|
233 |
|
(19 |
) |
| Other Countries |
79 |
|
64 |
|
23 |
|
| Income before tax business units |
2,576 |
|
2,162 |
|
19 |
|
| Interest charges and other |
(429 |
) |
(313 |
) |
37 |
|
| Income before tax |
2,147 |
|
1,849 |
|
16 |
|
| Corporation tax |
(572 |
) |
(353 |
) |
62 |
|
| Transamerica Finance Corporation |
218 |
|
51 |
|
|
|
| NET INCOME |
1,793 |
|
1,547 |
|
16 |
|
|
|
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| |
Americas
in million
EUR |
The
Netherlands
in million
EUR |
United
Kingdom
in million
EUR |
Other
Countries
in million
EUR |
Total
in million
EUR |
2003
Total life insurance gross premiums |
6,157 |
3,247 |
5,974 |
831 |
16,209 |
| Accident and health insurance premiums |
2,217 |
163 |
— |
83 |
2,463 |
| General insurance premiums |
— |
459 |
— |
337 |
796 |
| Total gross premiums |
8,374 |
3,869 |
5,974 |
1,251 |
19,468 |
| Investment income insurance activities |
5,618 |
1,465 |
137 |
132 |
7,352 |
| Fees and commissions |
854 |
265 |
90 |
12 |
1,221 |
| Income from banking activities |
— |
354 |
— |
— |
354 |
| Total revenues business units |
14,846 |
5,953 |
6,201 |
1,395 |
28,395 |
| Income from other activities |
— |
— |
— |
— |
34 |
| Total revenues |
— |
— |
— |
— |
28,429 |
| Number of employees, including agent-employees |
14,308 |
6,034 |
4,864 |
2,502 |
27,708 |
RESULTS
Full year net income of EUR 1,793 million increased 16% compared to EUR 1,547 million in 2002. The largest influences on full year results were improved equity and credit markets as well as improved administrative operating efficiencies.
Exchange rate translation negatively impacted the earnings reported in euro, which is the currency of the financial statements. At constant currency exchange rates net income and income before tax increased by 30% and 29% respectively in 2003.
Earnings per share for the full year amounted to EUR 1.15, an increase of 11% compared to EUR 1.04 for last year (adjusted for the 2002 stock dividend).
Standardized life production increased by 3% to EUR 2,545 million, which at constant currency exchange rates would have increased by 15%. The increase in standardized life production was driven by higher production in the Americas, the United Kingdom and Other Countries, in particular in Taiwan, partly offset by lower production in the Netherlands.
During 2003, indirect income of EUR 631 million pre-tax was included in earnings, compared to EUR 758 million pre-tax in 2002. As announced earlier, effective January 1, 2004, AEGON discontinued the indirect income method for recognizing gains and losses on investments in shares and real estate. A generally accepted and recognized method has been adopted, which is in accordance with International Financial Reporting Standards (IFRS) requirements and is similar to US GAAP. This method recognizes gains and losses on shares and real estate investments when realized.
Transamerica Finance Corporation (TFC), most of which was sold in line with our strategy to concentrate on life insurance, pensions, savings and investment products, contributed EUR 218 million to net income during 2003 compared to EUR 51 million in 2002.
The effective tax rate for 2003 was 27% compared to 19% in 2002. The lower effective tax rate in 2002 was largely due to a reduction of the deferred tax liability and favorable adjustments resulting from the filing of the 2001 corporate tax returns in the United States, lower taxable income relative to preferred investments and tax-exempt income in the Netherlands and the United States, and the use of tax losses in the United Kingdom.
The following selected financial data should be read in conjunction with AEGON’s consolidated financial statements and the related notes to the financial statements of this annual report. The discussion of AEGON’s full year results for 2003 includes comparative information presented in USD for the results in the Americas and in GBP for the results in the United Kingdom, which management believes is useful to investors because those businesses operate and are managed primarily in those currencies.
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