Dutch Government Invests In AEGON

AEGON believes that, given the current market situation, increasing capital beyond what is required for the company’s AA ratings would be prudent, the company says.

The capital increase will complement previously announced risk reduction and capital release strategies, AEGON says.

Standard and Poor’s Ratings Services, New York, responded by affirming the AA long-term counterparty credit and insurer financial strength ratings on AEGON’s main insurance operating entities.

“This capital increase will mitigate the balance sheet concerns highlighted by Standard & Poor’s back in April when we revised our outlook on AEGON to negative,” says Mark Button, an S&P credit analyst. “The maintenance of the negative outlook, however, recognizes that the operating environment in AEGON’s core markets has weakened significantly over recent months. This is likely to result in increased pressure on both AEGON’s earnings profile and its ability to execute on a number of balance-sheet management transactions.”

The rating agency says it views the government capital infusion as a “strong indicator” of government support for AEGON, but it says no explicit government support beyond the infusion is factored into the company’s rating.