AEGON’s Lehman Exposure $405 Million

The Netherlands AEGON has released details of its exposure to Lehman Brothers, following its filing for Chapter 11 bankruptcy protection in the US.

AEGON said it “does not hold common equity in Lehman Brothers. During 2008, AEGON has actively lowered its exposure to Lehman Brothers by approximately 20 percent. As of September 12, 2008, AEGON had a total general account fixed income exposure of €265 million [$405.3 million].”This amount includes Credit Default Swaps-related exposure to Lehman Brothers.”

AEGON added that the “ultimate effect of a default by Lehman Brothers on AEGON’s excess capital and net income will be substantially lower than €265 million as a result of a variety of factors, including taxes and recovery values.”

However, the Company also noted that it has “counter party exposure to Lehman Brothers through derivatives contracts and securities lending transactions. This exposure is either collateralized or on bankruptcy remote entities. The effect of unwinding these transactions is not expected to have a material impact on the Group’s earnings or capital position.”

CFO Jos Streppel commented: “AEGON continues to have a strong balance sheet and ample liquidity. Our financial flexibility of €1.8 billion [$2.56 billion] at the end of the second quarter provides additional assurance. We remain confident in AEGON’s ability to weather the challenging market environment and fulfill our obligations to our customers and many other key stakeholders.”

Source: AEGON – www.aegon.com