Consumer compensation of £25 million in the fourth quarter wiped off Aegon UK’s last quarter profits completely, forcing it to book a loss of £6 million in Q4, 2010. This compares with a profit of £29 million, reported over the same period last year.
Scottish Equitable – the former trading name of Aegon was fined £2.8 million by the FSA in January and was ordered to pay customers back £60 million for ‘significant’ administrative failings.
“Earnings dropped due to a charge related to our customer redress programme, which seeks to address historic issues in our customer records”, said Otto Thoreson, chief executive of Aegon UK.
“Completing this programme is an essential part of creating a strong platform to build on for the future and we are on track to repay the majority of consumer detriment by the end of 2011”, he added.
As the company carries on its restructuring its UK business, its new life and pensions business suffered and revenue for the quarter was down 15 percent to £190 million over Q4, 2009. However, profits for the year was up 30 percent over 2009 and was recorded at £61 million.
Aegon has been trying to improve profitability by cutting operating costs. It said it managed to lower costs by £33 million in 2010 and hopes to cut operating costs by £80 million this year.
Its distributions units Origen and Positive Solutions booked a combined loss of £5 million for the year, including £2 million in the last three months of 2010. The units had posted a combined loss of £16 million in 2009.