Dutch insurance giant Aegon is to receive three billion euros from a government emergency fund. The cash injection is considered necessary in order to strengthen the company’s core equity capital.
At a press conference, Dutch Finance Minister Wouter Bos stressed that Aegon is “in incredibly good health”. He added,
“The general situation is serious to the extent that even the healthiest of companies can get into difficulties. We will help them through these rough times.”
Early in October, Aegon’s recently appointed chairman, Alexander Wynaendts, announced that his company was faced with a 275-million-euro loss as its investments in failed or nationalised American banks plummeted. The company expects its net loss over the third quarter of 2008 to total 350 million euros.
Mr Bos pointed out that the money will be given under strict conditions. In exchange for its support the government will receive shares in the shape of securities. Aegon may later be able to buy these back from the government, at a higher price.
The cabinet is also nominating two members on the Board of Supervisors who have the last say in important decisions. As a further measure, Aegon’s top management will not be receiving any bonus payments this year. Severance packages will be limited to one year’s salary.
Shortly after the government announcement, Aegon shares rose by 1.8 percentage points on the AEX index at the Euronext-Amsterdam stock exchange.
Earlier this month the government in The Hague created a bailout fund of 20 billion euros to safeguard bank capital and liquidity amid the global credit crisis.
Two weeks ago Dutch bank insurer ING was the first company to request help from Finance Minister Wouter Bos’ emergency fund. ING was granted a capital injection of ten billion euros. So far, no other banks or insurers have applied to the government for support.
For more information: www.radionetherlands.nl