Zacks_Analysts' Blog : Aegon Buys Back from Dutch State - Analyst Blog

AEGON N.V. (AEG) has repurchased securities from the Dutch State, which had received the securities from Aegon for the capital support given at the time of the financial crisis.

Accordingly, Aegon has repurchased a total of €750 million convertible core capital securities, the intention of which was announced on February 24. Including this, Aegon has so far bought back a total of €2.25 billion, out of €3 billion state aid it had received. In addition, Aegon has committed to repurchase the remaining €750 million before the end of June 2011, which is subject to market conditions.

As per the original terms, Aegon will repay interest and premium charges on the core capital advanced by the Dutch State, which amounted to more than €1 billion.

The first repurchase by Aegon was made on November 30, 2009 for €1 billion in core capital, plus a premium of €108 million. Later in August 30, 2010, Aegon made another repurchase for €500 million in core capital, plus a premium of €52 million from the Dutch State.

Apart from the current repurchase for €750 million in core capital, Aegon also paid a premium of €375 million.

Aegon had secured €3 billion in core capital from the Dutch State in 2008. In return, the Dutch government received securities from Aegon for the capital support provided. Aegon will now gradually repurchase its securities from the State.

Later in 2010, Aegon received the European Commission's final assent to the terms relating to Aegon's participation in the capital support program. The European Commission recognized the steps taken by Aegon to strengthen its financial position, reduce its exposure to risk in the financial markets, lower costs and optimize its core businesses – life insurance, pensions and asset management, so that it can repurchase its securities from the Dutch government.

As a result, the company is aiming to maintain a substantial cash buffer. Aegon has agreed with its regulator, the Dutch Central Bank, that in the current environment it will maintain a capital buffer of 1.5 times its annual holding expenses.

Headquartered in The Hague, The Netherlands, Aegon, through its subsidiaries, provides life insurance, pensions and investment products in the Americas, Europe and Asia. The company also involves in accident, supplemental health, general insurance and banking activities. ING Group N.V. (ING) is one of its peers.