AEGON, the owner of Transamerica Corp., has confirmed that it is currently examining the possibility of acquiring a thrift in the United States. This would potentially allow the company to qualify for the U.S. government's Troubled Asset Relief Program (TARP).
The company said it "has no need for additional core capital beyond the €3 billion ($3.78 billion) secured from the Dutch State. AEGON believes it is prudent, and possibly advantageous, to explore the terms and conditions under which financial support may be available under TARP."
The bulletin added that at present, "no decision has been taken either with regard to the acquisition of a thrift in the United States or to AEGON's eventual participation in TARP. At this stage, it is unclear whether AEGON, as an insurance company domiciled in the Netherlands, would be eligible for the program. Ownership of a bank or a thrift institution is a necessary pre-requisite to any participation."
Jos Streppel, AEGON's CFO, commented: "AEGON has a sufficient capital buffer given our recent actions. The EUR 3 billion of core capital we secured last month from the Dutch State, combined with the measures we are taking ourselves, is more than adequate to ensure that we enter 2009 with a strong capital buffer. In the current market environment, we want to make sure that we carefully explore all possible financing options. And, as a company with sizable operations in the United States, it makes sense for us to examine the terms and conditions which may be available under the US government's TARP program."
The bulletin also noted the steps AEGON has taken recently to strengthen its capital position. These measures include:
- Steps to reduce risk and release capital from the company's businesses;
- Foregoing payment of the final dividend to common shareholders for 2008;
- Securing €3 billion ($3.78 billion) in additional core capital from the Dutch State, of which €1 billion ($1.26 billion) is repayable, at AEGON's option, within one year.
As a result of these measures, AEGON said it "has a capital buffer significantly in excess of AA rating requirements."
In the third quarter, AEGON released €729 million ($918.4 million) in additional capital from its businesses. The company expects to free up another €600 to €800 million ($756 million to $1 billion) in the fourth quarter.
Source: AEGON - www.aegon.com
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