Aegon’s earnings have taken a £4 million hit with the company blaming the retail distribution review (RDR) for a drop in business.
In its third quarter results, the life company reported its earnings were up by £20 million overall due to cost savings, but that this was partially offset by ‘adverse persistency’, meaning advisers were writing less business as they focussed on preparing for the RDR.
It said: ‘Positive impacts were partly offset by a £4 million negative effect from adverse persistency, which the UK insurance industry is experiencing in anticipation of the implementation of the RDR.’
The company also suffered a loss of £1 million through its distribution channels, national firms Positive Solutions and Origen.
Life sales were down 7% compared to the same quarter last year.
Aegon said this was in line with expectations, and added that platform sales were up due to new advisers using the Aegon Retirement Choice platform.
Operating expenses were reduced 30% this quarter, to £73 million. Aegon said that was due to the successful implementation of its cost reduction programme, launched in June 2010 and which targeted £80 million of annualised cost across the UK business.
Aegon UK chief executive Adrian Grace (pictured) said that the company had chosen to transform its product set ahead of the RDR, instead of 'tinkering' with existing products and overhauling its proposition. He added that the streamlining had helped cut costs.
'We are confident our actions put us at a competitive advantage to grow new business that is aligned to the new legislation and meet the ever evolving needs of our customers,' he said. 'We’re confident that is the right strategy and the key decisions we have taken will cement Aegon UK as a major force to be reckoned in the UK life and pensions industry over the long-term.'