Aegon Completes Sale of its Canadian Life Insurance Business

THE HAGUE, July 31, 2015 /PRNewswire/ —

Aegon has completed the sale of its Canadian life insurance business to Wilton Re following regulatory approval.

The agreement to sell Aegon’s Canadian life insurance business to Wilton Re for CAD 600 million (EUR 417 million) was announced on October 16, 2014. The transaction will result in a book loss of CAD 1.2 billion (EUR 0.8 billion), which will be booked in the third quarter of 2015. Aegon has earmarked the proceeds of this transaction for the redemption of the USD 500 million 4.625% senior bond, due December 2015.

The combination of the divestment and the non-refinancing of the bond will improve Aegon’s return on equity by approximately 40 basis points, while reducing net underlying earnings by less than 1%. It will also improve Aegon’s leverage ratio by approximately 40 basis points on a pro forma basis, while the fixed charge cover ratio will improve by 0.5 times.


Forward-looking statements 

The statements contained in this document that are not historical facts are forward-looking statements as defined in the US Private Securities Litigation Reform Act of 1995. The following are words that identify such forward-looking statements: aim, believe, estimate, target, intend, may, expect, anticipate, predict, project, counting on, plan, continue, want, forecast, goal, should, would, is confident, will, and similar expressions as they relate to Aegon. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Aegon undertakes no obligation to publicly update or revise any forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which merely reflect company expectations at the time of writing. Actual results may differ materially from expectations conveyed in forward-looking statements due to changes caused by various risks and uncertainties. Such risks and uncertainties include but are not limited to the following:

  • Changes in general economic conditions, particularly in the United States, the Netherlands and the United Kingdom;
  • Changes in the performance of financial markets, including emerging markets, such as with regard to:
  • The frequency and severity of defaults by issuers in Aegon’s fixed income investment portfolios;
  • The effects of corporate bankruptcies and/or accounting restatements on the financial markets and the resulting decline in the value of equity and debt securities Aegon holds; and
  • The effects of declining creditworthiness of certain private sector securities and the resulting decline in the value of sovereign exposure that Aegon holds;
  • Changes in the performance of Aegon’s investment portfolio and decline in ratings of Aegon’s counterparties;
  • Consequences of a potential (partial) break-up of the euro;
  • The frequency and severity of insured loss events;
  • Changes affecting longevity, mortality, morbidity, persistence and other factors that may impact the profitability of Aegon’s insurance products;
  • Reinsurers to whom Aegon has ceded significant underwriting risks may fail to meet their obligations;
  • Changes affecting interest rate levels and continuing low or rapidly changing interest rate levels;
  • Changes affecting currency exchange rates, in particular the EUR/USD and EUR/GBP exchange rates;
  • Changes in the availability of, and costs associated with, liquidity sources such as bank and capital markets funding, as well as conditions in the credit markets in general such as changes in borrower and counterparty creditworthiness;
  • Increasing levels of competition in the United States, the Netherlands, the United Kingdom and emerging markets;
  • Changes in laws and regulations, particularly those affecting Aegon’s operations, ability to hire and retain key personnel, the products Aegon sells, and the attractiveness of certain products to its consumers;
  • Regulatory changes relating to the insurance industry in the jurisdictions in which Aegon operates;
  • Changes in customer behavior and public opinion in general related to, among other things, the type of products also Aegon sells, including legal, regulatory or commercial necessity to meet changing customer expectations;
  • Acts of God, acts of terrorism, acts of war and pandemics;
  • Changes in the policies of central banks and/or governments;
  • Lowering of one or more of Aegon’s debt ratings issued by recognized rating organizations and the adverse impact such action may have on Aegon’s ability to raise capital and on its liquidity and financial condition;
  • Lowering of one or more of insurer financial strength ratings of Aegon’s insurance subsidiaries and the adverse impact such action may have on the premium writings, policy retention, profitability and liquidity of its insurance subsidiaries;
  • The effect of the European Union’s Solvency II requirements and other regulations in other jurisdictions affecting the capital Aegon is required to maintain;
  • Litigation or regulatory action that could require Aegon to pay significant damages or change the way Aegon does business;
  • As Aegon’s operations support complex transactions and are highly dependent on the proper functioning of information technology, a computer system failure or security breach may disrupt Aegon’s business, damage its reputation and adversely affect its results of operations, financial condition and cash flows;
  • Customer responsiveness to both new products and distribution channels;
  • Competitive, legal, regulatory, or tax changes that affect profitability, the distribution cost of or demand for Aegon’s products;
  • Changes in accounting regulations and policies or a change by Aegon in applying such regulations and policies, voluntarily or otherwise, may affect Aegon’s reported results and shareholders’ equity;
  • The impact of acquisitions and divestitures, restructurings, product withdrawals and other unusual items, including Aegon’s ability to integrate acquisitions and to obtain the anticipated results and synergies from acquisitions;
  • Catastrophic events, either manmade or by nature, could result in material losses and significantly interrupt Aegon’s business; and
  • Aegon’s failure to achieve anticipated levels of earnings or operational efficiencies as well as other cost saving and excess capital and leverage ratio management initiatives.

Further details of potential risks and uncertainties affecting Aegon are described in its filings with the Netherlands Authority for the Financial Markets and the US Securities and Exchange Commission, including the Annual Report. These forward-looking statements speak only as of the date of this document. Except as required by any applicable law or regulation, Aegon expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Aegon’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Aegon’s roots go back more than 150 years – to the first half of the nineteenth century. Since then, Aegon has grown into an international company, with businesses in more than 20 countries in the Americas, Europe and Asia. Today, Aegon is one of the world’s leading financial services organizations, providing life insurance, pensions and asset management. Aegon’s purpose is to help people take responsibility for their financial future. More information:

Media relations

Dick Schiethart


Investor relations

Willem van den Berg



RSA Surges Most in Two Decades as Zurich Weighs Takeover Bid

 and  | Bloomberg

RSA Insurance Group Plc surged by the most since the deal that created it almost two decades ago after Zurich Insurance Group said it was considering a bid, stirring speculation the British company could attract another suitor.

RSA may fetch about 563 pence a share, or about 5.7 billion pounds ($8.8 billion), according to Panmure Gordon & Co. analysts. The stock jumped 18 percent to 518.5 pence in London, the biggest gain since Sun Alliance Group Plc and Royal Insurance Holdings Plc’s merger in 1996.

Allianz SE, Europe’s biggest insurer, and France’s Axa SA may also bid for RSA, whose shares have trailed peers in the past year, analysts said.

 “RSA is now effectively in play,” said Barrie Cornes, an analyst at Panmure with a hold rating on the insurer. “Others will now place the slide rule over the company that has for many many years been a perennial takeover story.”

The talks are a sign a revival in mergers among European insurers is beginning to gain momentum. Dealmaking has been crimped in recent years amid a cloud of uncertainty about how much capital insurers need to hold under the latest round of rules known as Solvency II.

A deal would be Zurich’s biggest since 2000 and let Chief Executive Officer Martin Senn, 58, expand in the U.K. and Latin America as well as access RSA’s profitable Scandinavian and Canadian units. Zurich reiterated in May that it would redeploy $3 billion of surplus capital by the end of 2016.

28-Day Deadline

Zurich fell 1.8 percent to 291 francs in Swiss trading for a market value of 43.5 billion francs ($45.1 billion). The stock has fallen almost 7 percent this year.

Zurich said in a statement Tuesday its deliberations don’t “amount to a firm intention” to make an offer. Under the U.K. takeover rules, the company has 28 days to make a formal offer or walk away for six months unless RSA consents to an extension.

RSA said in response it hasn’t held talks with, or received a proposal from, Zurich and advised shareholders to take no action. Both insurers are set to report earnings Aug. 6.

Daniel Bischof, an analyst at Baader Helvea in Zurich said a competing bid from others including both Allianz and Axa couldn’t “quite be written off.” Spokesmen at Axa and Allianz declined to comment.

For RSA, a takeover would cap a tumultuous two-year period for the insurer which has included an accounting scandal in Ireland in 2013, Simon Lee’s departure as CEO, a stock sale and a spate of asset disposals to shore up the balance sheet. Stephen Hester, the former CEO of Royal Bank of Scotland Group Plc, took the reins at RSA last year.

Worst Performer

Before today, RSA’s stock was down 4.6 percent over the past 12 months, the worst performer in the nine-member FTSE 350 Nonlife Insurance Index, which gained 15 percent in the period.

The company, which traces its roots to the Sun Fire Office in 1710 and insured the home of Captain James Cook, focuses on household and auto as well as commercial property and liability cover. The insurer posted a pretax profit of 275 million pounds in 2014, compared with a loss the previous year.

A takeover of RSA would be the biggest acquisition of a U.K. insurer since Aviva Plc completed its 5.4 billion-pound purchase of Friends Life Group Ltd. in April.

RSA’s 3.1 billion-pound pension fund deficit may yet present a hurdle to a deal which has deterred some insurers from making formal offers in the past, according to people with knowledge of those discussions who asked not to be identified because they weren’t authorized to speak publicly.

“The transaction could still make sense,” said Sami Taipalus, a London-based analyst at Berenberg. “With a group as big as Zurich the pension liabilities don’t really matter.”

Are 3 big insurers a flashing light for regulators?

WASHINGTON – Would a reduction from five health insurance giants to three trigger a flashing light for regulators concerned about industry competition?

That’s how many big companies could remain after the proposed combinations of Anthem with Cigna and Aetna with Humana, and experts say it would at a minimum bring scrutiny of the deals.

 At only three companies, “The agencies’ ears tend to perk up,” said Allen Grunes, who led merger investigations at the Justice Department as an antitrust attorney. “The underlying economic concerns start to really kick in,” said Grunes, a co-founder and attorney at the Konkurrenz Group in Washington.

In this case, the Justice Department will have to pass judgment on Anthem’s planned $48 billion acquisition of rival Cigna, a deal that would create the nation’s largest health insurer by enrolment with about 53 million U.S. patients. The antitrust attorneys and economists at Justice will also be examining Aetna’s $35 billion deal for Humana.

The question is whether the mergers would hurt competition and consumers, making the companies so dominant that they could push already high health-care costs even higher.

“This will be a very lengthy and complicated process,” said Robert Bell, an antitrust attorney at Hughes Hubbard.

Health care is one of three major industries — along with food and energy — that are especially important to the economy and consumers, and so they receive a careful review from regulators, he said.

“I think the government’s going to be extremely cautious about reducing the number of primary health care carriers down to three,” Bell suggested. “I would be very surprised if both mergers were permitted to go through.”

The proposed deals also are likely to draw the attention of state attorneys general, he said.

Among the factors the government likely will examine:

—What does competition look like in the markets — in states and for different insurance products — where the companies now operate, and how might that change after the mergers?

—How easy is it for new competitors to enter those markets? If the number of big companies is reduced, would new ones come in to fill the gap?

— What is the impact of the health-care overhaul law on competition in the industry?

But health-care policy consultant Dan Mendelson said that when the Justice Department monitors review the mergers, they’ll look at them on a local, not national, level. Health care is local, and the two proposed mergers don’t involve much geographic overlap, he said. That means they wouldn’t create the sort of consolidation involved in other industries such as telecommunications, in his view.

“I think by historical standards these mergers go through,” said Mendelson, who is CEO of Washington-based consulting firm Avalere Health. “They go through because there is not a lot of overlap, and they create efficiencies and allow companies to spread (costs) across a lot more people.”

Mendelson acknowledges that the question here will be whether the historical standards hold.

The picture is complicated by the fact that the insurance industry is regulated by states, not the federal government. States decide how insurers can conduct business and what new companies can enter the market.

Some states have a very competitive environment for health insurance while in others a few companies dominate the market, said Jesse O’Brien, a health-care advocate with the U.S. Public Interest Research Group. He puts Oregon, California and New York among those in the competitive category, and West Virginia, Illinois and Michigan in the category with a few dominant companies.

For the government regulators, “There’s kind of a balancing act that needs to be struck,” O’Brien said.

AP Health Writer Matthew Perrone contributed to this report.


Detroit cancer doctor gets 45 year sentence for ‘horrific’ insurance scheme

By Andrew Russell | Global News

A Detroit-area cancer doctor was sentenced Friday to 45 years in prison for a massive insurance scheme that saw him collect more than $17 million while his patients suffered through needless chemotherapy.

Dr. Farid Fata, 50, wept in court as he apologized for the harm he caused his patients. He pled guilty to fraud, money laundering and conspiracy.

“I misused my talents, yes, and permitted this sin to enter me because of power and greed,” Fata said. “My quest for power is self-destructive.”

U.S. prosecutors found that Fata had fraudulently billed Medicare and other insurance companies for 553 patients who were misdiagnosed, overtreated and undertreated.

According to former patients and experts who testified in court, in some cases, he gave nearly four times the recommended dosage amount of aggressive cancer drugs. In one of the most egregious cases, a patient was given toxic chemotherapy for five years when the standard treatment was six months.

“This is a huge, horrific series of criminal acts that were committed by the defendant,” U.S. District Judge Paul Borman said before sentencing Fata. He added that the cancer doctor “practiced greed and shut down whatever compassion he had.”

Through the fraudulent claims Medicare and other insurers were billed for more than $34 million while Fata collected $17.6 million in billing he admitted was unnecessary.

U.S. Attorney Barbara McQuade called the actions “the most serious case of fraud in the history of the country.”

“There have certainly been significant financial fraud cases but nothing with the kind of stunning physical harm that we saw in this case,” McQuade told reporters following the sentencing. “We thought a lentghy sentence was necessary both to punish Dr. Fata and to deter any other doctor or other professional out there who would even think about causing such harm on his patients.”

Federal prosecutors had asked for a prison sentence of 175 years, while lawyers for Fata sought 25 years.

Ellen Piligiam, whose late father was administered powerful drugs he didn’t need for a tumor in his shoulder, described how Fata used terminal illness to prey on his patients.

“He preyed on our trust, our exhaustion, our fears,” Piligiam told the Associated Press.

McQuade said although there are 553 documented victims there were countless more who suffered.

“For every one of those individual victims there are countless family members who also suffered along with them. So it is hard to quantity the amount of harm that happens in a case like this,” she said.

Prosecutors said Fata ran the scheme from 2009 to 2014 through his medical businesses, including Michigan Hematology Oncology Centers, which has seven offices in the Detroit area.

*With files from the Associated Press

Did you know that some of the largest companies in the world– like Apple and Microsoft–are  in the insurance business?

Read more

US: The Insane Reason You Could Pay 50% More For Car Insurance

Source: Time

You probably figure that if you’re a bad driver and collect some fender-benders or speeding tickets in your DMV record, your insurance company is going to charge you accordingly. But what you might not have expected is that insurers also might slap you with penalties — sometimes hefty ones — if you’ve blown off paying a bill here or there.

Car insurance companies in all but three states — California, Hawaii and Massachusetts, where it’s illegal — use a driver’s credit history in the secret sauce of their underwriting formulas. People with bad credit are considered higher-risk customers, so insurers often charge them more, explains Jill Gonzalez, an expert at WalletHub, a personal finance site that just published a study showing what insurance companies in what states penalize drivers the most for poor credit.

WalletHub asked the five biggest car insurance companies in the country for quotes for two imaginary drivers who were identical except that one test case had excellent credit and the other had no credit history.

“There is a strong correlation between one’s credit characteristics and insurance losses,” Gonzalez says. “The insurance companies usually look at the the credit history to see how the insured can manage his or her risk exposure.”

Across the board, the difference between quotes given to the “great credit” versus the “no credit” driver varied by 49%, but some fluctuations were much, much greater.

Credit obviously isn’t the only factor insurers look at to determine premiums, and different companies assign varying degrees of importance to this characteristic. WalletHub’s study finds that Farmers Insurance seems to place the most weight on driver credit data, with a 62% difference between quotes given to WalletHub’s two hypothetical drivers. Even Geico, the insurer WalletHub says “seems to rely on credit data the least,” has a 32% fluctuation between the two driver scenarios.

The results also vary widely by state; in Connecticut, the impact of great credit versus no credit only contributes to a 15% fluctuation in premiums. In Michigan, however, it’s another story: WalletHub finds that credit status contributes to a 115% fluctuation in rates.

Gonzalez says the biggest issue consumers face is that a lot of companies aren’t up-front about their use of credit data in underwriting. “The problem we discovered is that not all of the companies are transparent in letting their customers know that credit scores impact insurance premiums to a significant extent,” she says.

WalletHub looked at the websites of the 10 biggest auto insurers to see how soon, how often and how prominently they advised customers that their credit would be a variable in the eventual premium price they were quoted. It says Progressive is the most transparent, but Gonzalez points out that a lack of transparency among many carriers means that drivers have to do a lot more homework if they have credit problems.

“Consumers with no credit have to do some serious research before deciding on an insurance company,” she says.

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