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REVIEW OF OPERATIONS
AEGON UNITED KINGDOM
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2004 |
20031 |
|
2004 |
20031 |
|
| INCOME BY PRODUCT SEGMENT |
in
million
USD |
in
million
USD |
% |
in
million
EUR |
in
million
EUR |
% |
| Traditional life |
(7) |
1 |
|
(11) |
2 |
|
| Life for account of policyholders |
154 |
128 |
20 |
227 |
184 |
23 |
| Fee business |
1 |
1 |
|
6 |
2 |
|
| Income before realized gains and losses on |
|
|
|
|
|
|
| shares and real estate |
151 |
130 |
16 |
222 |
188 |
18 |
| Realized gains and losses on |
|
|
|
|
|
|
| shares and real estate |
(3) |
(10) |
|
(4) |
(15) |
|
| Income before tax |
148 |
120 |
23 |
218 |
173 |
26 |
| Corporation tax |
(42) |
(34) |
24 |
(62) |
(49) |
27 |
| NET INCOME |
106 |
86 |
23 |
156 |
124 |
26 |
|
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|
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| EXCHANGE RATES |
|
|
Weighted average |
Year-end |
| PER 1 EUR |
2004 |
2003 |
2004 |
2003 |
| GBP |
0.6790 |
0.6909 |
0.7051 |
0.7048 |
INCOME BEFORE REALIZED GAINS AND LOSSES
Income before realized gains and losses on shares and real estate of GBP 151 million in 2004 increased 16% compared to 2003. The main reason for the increase was higher policy fee income reflecting an average 12% higher FTSE level in 2004 compared to 2003.
Traditional life reported a loss of GBP 7 million before realized gains and losses on shares and real estate, a decline of GBP 8 million compared to 2003. The main reason is that the 2003 result included a number of one-off mortality profits and provision releases.
Income before realized gains and losses on shares and real estate in the life for account of policyholder product segment was GBP 154 million for 2004, an increase of 20% compared to 2003. This growth is primarily due to increased levels of equity markets.
Since December 31, 2003, AEGON UK has acquired further stakes in distribution companies. These acquisitions did not materially impact fee business net income in 2004.
NET INCOME
Net income for 2004 of GBP 106 million increased 23% compared to 2003. The effective tax rate of 28% is in line with 2003.
REVENUES
Revenues of GBP 4,189 million are in line with 2003. The increase in fee and commission revenues is due to growth (including two acquisitions) in revenues from distribution companies.
COMMISSIONS AND EXPENSES
Commissions and expenses decreased 4% to GBP 426 million in 2004. This is largely due to lower amortization of deferred policy acquisition cost, partially offset by expansion in the distribution companies (including the effect from acquisitions). Both in 2003 and 2004, GBP 10 million of restructuring charges were taken related to expense reduction programs. These restructuring costs resulted from a broad review of all of AEGON UK’s operations. The charges arose from the costs of redundancies and the provision for vacant property as a result of the rationalization of accommodation.
Operating expenses decreased 1% to GBP 333 million, including GBP 24 million of cost reductions due to the cost reduction programs, partially offset by restructuring costs and growth in IFAs.
PRODUCTION
The increase in production of 4% reflects growth in AEGON UK’s core individual and group pensions businesses, partly offset by a fall in asset management institutional sales to pension fund trustees. |
