Aegon retains UK protection but cost cuts continue

Aegon will retain its UK life insurance and protection businesses after outlining the latest stage of plans to cut costs by 25%.

The Dutch insurer says the businesses support its aim of focusing on the 'core' at-retirement market.

It has closed its third party pensions administration and employee benefits software businesses as they are not central to its future proposition.

It will retain the closed-book of business of Guardian Financial Services, which it says continues to provide steady cash flow.

Aegon N.V. chief executive Alex Wynaendts says the UK continues to be a "key" market for Aegon.

"The measures we are taking in the UK are essential to our larger objective of improving returns and sharpening our focus on the long-term prospects for our business," he says.

Roy McLoughlin, senior partner at Master Adviser, says it would have been a "nightmare" if Aegon had withdrawn from the protection space.

"This is great news. Aegon is at the forefront of UK protection and its underwriting, particularly on non-straightforward cases, is second to none."

The announcement is the latest stage of the Dutch insurer's plans to reduce costs in its UK business by 25%.

It said in June it hopes to trim annual spending in the UK by £80m by pulling out of unprofitable areas across its global business.

In the UK, that means no longer providing bulk annuities. It has already withdrawn, last summer, from the UK group risk space.

Instead, the company will focus on the "core" markets of 'at retirement' and 'workplace savings', including SIPPs.

Earlier this month, Aegon UK announced it was halving its number of sales centres and reducing the number of job roles by 106.

The company has not disclosed details of any further anticipated job losses because it is yet to begin official discussions with the relevant unions, including Aegis.

Aegon UK sales director Duncan Jarrett said earlier this month the decision to reduce the number of sales centres was part of a process which began more than a year ago to change the way it supports its intermediary distributors.

The company's support and service to IFAs will improve, not deteriorate, he said.