Europe - Aegon is withdrawing from the bulk annuities market with immediate effect as part of a restructure of its UK life and pensions business.
The insurer said increasing price competition in the market meant the business was not hitting profitability targets.
It said it would take significant steps to improve return on capital by targeting cost
reductions of 25% in its life and pensions business by 2011.
Aegon said it would refocus the business on the growth market segments of at-retirement and workplace savings, where it says it has "leading positions".
The company adds it will continue to invest in the UK personal private pensions market and group pensions. Its distribution arms, Positive Solutions and Origen, remain unaffected by the changes.
Aegon said the measures are aimed at improving return on capital from 2.7% in 2009 to between 8% and 10% by 2014, and generating cash flow of between £600m and £650m between 2010 and 2014.
Aegon group chief executive officer Alex Wynaendts said the company has introduced the measures because it was "not satisfied" with the current returns on capital in the UK, adding the cost saving measures would impact employment.
He said the group had considered "all options" for its UK business, including "full disposal", "run-off" and restructuring.
"We are taking steps to focus on our core business and will continue to allocate capital to those businesses and markets that offer higher growth and returns over the long-term," he said.
"I have full confidence the management team in the UK is committed to this restructure and realising its intended benefits."
However, trade union Aegis, which represents Aegon's UK employees, says it is concerned by today's announcement.
"While it's reassuring that Aegon remains committed to the UK, the scale of change announced today has come as a blow to our members," general secretary Brian Linn says.
"At this point, we don't have any details how these changes and cost savings can be achieved. We need to see a breakdown of the company's proposals before we can assess the likely impact on our members."
Aegon UK yesterday moved to deny reports suggesting its Dutch parent was preparing to offload its British life and pensions business for £1.5bn.
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