The surprise move has left advisers facing the task of moving existing customers to other providers as soon as possible. The group risk business will be wound down completely over the next 24 months
Quotes confirmed as won, with an on-risk date will be subject to new rates and restrictions on changes to membership and benefit levels at the end of the two-year rate guarantee period.
Rate reviews due from 1 September 2009 onwards will be processed if requested but Aegon will restrict the renewal to existing members and benefits levels only and it will apply a new pricing policy that will be increased. A one-year rate guarantee period will be offered. Full details of the wind-down strategy are available at www.aegonse.co.uk/eb.
Some advisers have expressed surprise that Aegon was not able to find a buyer for its book. Others are concerned that Aegon may currently be covering risks that other providers will not deal with.
The insurer says the move is in line with its strategy to focus on markets and products with good profit potential and where it has the opportunity to gain a sizeable market presence. Aegon says it will now target areas where it already has a sizeable market share such as pensions, individual protection, investments and annuities.
Aegon acquired the life and pensions business of Guardian Royal Exchange in 1999 and launched Aegon Employee Benefits in 2001. In 2008 AEGON Employee Benefits contributed less than 2 per cent of Aegon UK’s APE new business figures.
Carlos Correia, senior consultant, risk benefit unit at Lane Clark & Peacock says: “The danger of a company in run-off is that it becomes harsh on claims, particularly in borderline cases. It seems very likely advisers will need to transfer elsewhere as soon as possible.”