Reuters logo
TEXT-Fitch revises Aegon's outlook to negative
September 21, 2012 / 4:26 PM / 5 years ago

TEXT-Fitch revises Aegon's outlook to negative

Sept 21 - Fitch Ratings has affirmed AEGON N.V.'s (AEGON)
Long-term Issuer Default Rating (IDR) at 'A' and senior unsecured debt at 'A-'.
Fitch has also affirmed the Insurer Financial Strength (IFS) ratings of AEGON's
primary North American life insurance subsidiaries (AEGON Americas) at 'AA-'.
The Outlooks on AEGON's Long-term IDR and the IFS ratings of its primary North
American life insurance subsidiaries have been revised to Negative from Stable.
A full list of rating actions is at the end of this comment.

The affirmations reflect AEGON's continued capital strength and its stable but
high financial leverage. AEGON's ratings continue to reflect the diversification
of both its products and distribution, particularly in US retail markets, its
measured risk appetite and its focus on cost control.

The Outlook revision reflects that AEGON's financial leverage as calculated by
Fitch (32% at 30 June 2012) and fixed-charge cover (below 4x in 2011) remain
materially outside stated guidelines for the rating level. The ratings are
likely to be downgraded if financial leverage does not improve to below 30% and
fixed-charge cover to above 5x.

AEGON's credit-related losses have declined significantly but risks remain from
the company's exposure to US residential mortgage-backed securities and
commercial mortgage-related investments. However, at current levels,
credit-related losses do not pose a serious threat to AEGON's ratings, given its
operating earnings profile and capital strength.

Fitch expects that AEGON's operating profit will gradually improve as the
company executes its strategy to focus on core operations, scale back non-core
operations and improve operating efficiency.

Key rating drivers that could lead to a downgrade include financial leverage
remaining above 30%; fixed-charge cover remaining below 5x; large credit-related
investment losses (realised or unrealised); a material decline in operating
profitability; or underperformance of AEGON's hedging programme on its US
variable annuity portfolio. An upgrade in the near term is unlikely.

The rating actions are as follows:

AEGON N.V.
Long-term IDR: affirmed at 'A'; Outlook revised to Negative from Stable
Senior unsecured debt: affirmed at 'A-'
Short-term IDR and commercial paper programme: affirmed at 'F1'

The following AEGON N.V. perpetual capital securities are affirmed at 'BBB':
USD500m 6.5%, callable 12/2010 (NL0000062420)
USD250m floating rate, callable 12/2010 (NL0000062438)
NLG450m 4.26%, callable 03/2021 (NL0000120889)
EUR200m 6%, callable 07/2011 (NL0000168466)
USD550m 6.875%, callable 09/2011 (NL0000686368)
USD1,050m 7.25%, callable 12/2012 (NL0006056814)
EUR950m floating rate, callable 07/2014 (NL0000116150)
USD500m floating rate, callable 07/2014 (NL0000116168)
NLG250m 4.156%, callable 06/2015 (NL0000120004)
USD1,000m 6.375%, callable 06/2015 (NL0000021541)
NLG300m 5.185%, callable 10/2018 (NL0000121416)
USD525m 8%, callable 08/2017 (US007924608)

The following AEGON North American life insurance subsidiary companies'
Long-term IFS ratings have been affirmed at 'AA-'. The Outlooks of all the
companies have been revised to Negative from Stable:
Transamerica Advisors Life Insurance Company
Transamerica Advisors Life Insurance Company of New York
Monumental Life Insurance Company
Stonebridge Life Insurance Company
Transamerica Financial Life Insurance Company
Transamerica Life Canada
Transamerica Life Insurance Company
Transamerica Life International (Bermuda) Ltd.
Western Reserve Life Assurance Co. of Ohio

The following AEGON subsidiary companies' Short-term IFS ratings have been
affirmed at 'F1+':
Monumental Life Insurance Company
Transamerica Financial Life Insurance Company
Transamerica Life Insurance Company

The following AEGON subsidiary companies' secured notes programme and
outstanding issues have been affirmed at 'AA-':
Monumental Global Funding III
Monumental Global Funding II
Monumental Global Funding Ltd.

Transamerica Corporation:
Long-term IDR affirmed at 'A'; Outlook revised to Negative from Stable

Transamerica Capital II:
Trust Preferred 7.65% due 12/1/2026, affirmed at 'BBB'

Transamerica Capital III:
Trust Preferred 7.625% due 11/15/2037, affirmed at 'BBB'

AEGON Funding Company LLC:
Commercial paper: affirmed at 'F1'
Senior debt: affirmed at 'A-'

The following AEGON subsidiary company's senior debt and medium term notes have
been affirmed at 'A-':
Commonwealth General CorporationAdditional information is available on www.fitchratings.com.

The ratings above were solicited by, or on behalf of, the issuer, and therefore,
Fitch has been compensated for the provision of the ratings.

Applicable criteria, 'Insurance Rating Methodology' dated 19 September 2012, are
available at www.fitchratings.com.

Applicable Criteria and Related Research:
Insurance Rating Methodology

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below