A.M. Best Affirms Ratings of Aegon N.V. U.S. and Canadian Subsidiaries

OLDWICK, N.J.–(BUSINESS WIRE)– A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) and issuer credit ratings (ICR) of “aa-” of the U.S. life/health subsidiaries of Aegon N.V. (Aegon) (Netherlands) [NYSE: AEG]. Aegon’s U.S. life/health companies are collectively referred to as Aegon USA Group (Aegon USA). In addition, A.M. Best has affirmed the debt ratings of “aa-” on the outstanding notes issued under the funding agreement-backed securities (FABS) programs sponsored by Monumental Life Insurance Company (Cedar Rapids, IA), a member of Aegon USA. Concurrently, A.M. Best has affirmed the FSR of A (Excellent) and ICR of “a” of Stonebridge Casualty InsuranceCompany (Stonebridge Casualty), the property/casualty member of Aegon USA.

A.M. Best also has affirmed the FSR of A- (Excellent) and ICR of “a-” of Transamerica Life Canada (TLC) (Toronto, Ontario) a wholly owned subsidiary of Aegon and the FSR of A (Excellent) and ICR of “a” of Canadian Premier Life Insurance Company (CPL), a subsidiary of TLC. The outlook for all ratings is stable. (See below for a detailed listing of the companies and ratings.)

The rating affirmations of Aegon USA reflect its favorable earnings performance and risk-adjusted capitalization during 2012. International Financial Reporting Standards (IFRS) earnings for Aegon Americas (which includes its U.S., Canadian and Latin American operations) were $1.3 billion for year-end 2012.

Aegon USA recorded U.S. statutory net income of $1.8 billion for year-end 2012. The group’s risk-adjusted capitalization remained strong as its year-end 2012 regulatory capital ratio improved slightly over the previous year and is significantly higher than historical levels.

Aegon USA’s stand-alone credit profile considers its strong market position in a number of U.S. life and annuity market segments, a large multi-channel distribution platform, its diversified sources of earnings and a strong positive cash flow. The organization also benefits from meaningful economies of scale, strong brand name recognition and effective asset/liability and liquidity management. Aegon USA’s ratings also recognize A.M. Best’s assessment of the financial strength and support of Aegon. As a result, the stand-alone ratings of Aegon USA receive rating enhancement in consideration of Aegon’s overall creditworthiness and the strategic and financial importance of the U.S. operations to Aegon.

A.M. Best notes that Aegon USA has taken various initiatives to de-risk its balance sheet and improve its risk profile. The quality of its investment portfolio has been upgraded by reducing hedge fund holdings and increasing positions in treasuries and other short-term investments. The institutional spread-based business (primarily guaranteed interest contracts, funding agreements …read more

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