AEGON UK, which employs around 1,200 people in Edinburgh, has recorded strong growth in profits but suffered an apparent reverse in the investment platform market it has decided to focus on.

Meanwhile another big finance sector employer in Scotland, Aviva, has achieved strong growth in the pensions market which Aegon cooled on.

Dutch-owned Aegon UK became a significant player in the pensions business through the acquisition of Scottish Equitable in 1994.

However, under the leadership of former chief executive Adrian Grace the Edinburgh-based company switched its focus to the market for the provision of online platforms that investors can use to manage their portfolios on.

With demand for platforms increasing as people are required to take more responsibility for saving for retirement, Aegon UK has won backing from its Dutch parent group for an expansion drive which has included acquisitions.

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In its third quarter results announcement the group said the UK business had increased operating profits by 57% compared with the same period last year, to £44 million.

The group said the increase was driven by factors such as favourable equity markets, a provision release, and lower expenses.

It said these more than offset the impacts from the loss of earnings due to the sale of the Stonebridge accident insurance business and the gradual run-off of the traditional product portfolio.

However, the group noted: “Aegon’s platform business in the United Kingdom – excluding the low-margin Institutional business – had net outflows of £459m, while it had £173m net deposits in the comparable quarter in 2020.”

A spokesperson for Aegon UK said outflows were driven by the loss of a low margin workplace scheme and the service the firm provides for institutions, in which flows can be “lumpy”.

The spokesperson said that if low margin areas were stripped out, platform net flows were positive and had more than doubled against the same period last year.

The company maintained total assets under administration at £200bn in the third quarter, helped by the rise in equity prices.

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The appeal of platforms was underlined this week when the former Standard Life Aberdeen, which changed its name to abrdn, confirmed it is in talks to buy Interactive Investor in a deal that is thought to value the business at around £1.5 billion. Edinburgh-based platforms specialist Nucleus Financial was acquired by a private equity-backed rival, James Hay, for £145m in August.

The Aegon UK spokesperson said: “Our current priority is to concentrate on ensuring the platforms we have at the moment are working well. We do however remain open-minded about future acquisitions.”

Aegon UK outsourced the administration of its UK pension book to Atos in 2018 under efforts to cuts costs. Around 800 Aegon UK staff moved to Atos as part of the deal. 

Separately, Aviva, which employs around 1,800 people in Scotland, has seen its savings and retirement business enjoy strong growth.

In a trading update, Aviva said sales of savings and retirement products increased by 34% in total in the first nine months to £17bn from £12.6bn.

The company said retail sales increased by 52%.. It added: “Workplace sales were up 24% due to increased membership in existing schemes and good levels of new scheme wins.”

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General insurance premiums increased by 5% on the first nine months last time, to £6.5bn, the highest figure in a decade.

Chief executive Amanda Blanc said: “We continue to make excellent and rapid strategic progress, right across Aviva. The completion of disposals in France and Italy GI (General Insurance) since the half year are significant milestones as we deliver a radically simplified and refocused Aviva.”

London-based Aviva decided last year to close centres in Bishopbriggs and Glasgow and to move the employees concerned to a new office on the Maxim Business Park in Motherwell. A spokesperson said the move had been completed without resulting in any job losses. Aviva also has an office in Perth.

The group was formed in 2000 through the merger of Norwich Union and CGU, which included the Perth-based General Accident business.

Mike Holliday-Williams succeeded Mr Grace as chief executive of Aegon UK in January last year.

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Aegon suffered a 13% fall in core group operating profits in the third quarter. It said this was primarily the result of adverse claims experience in the United States – with Covid-19 and a higher average claim size being the most important drivers.

Interactive Investor describes itself as the United Kingdom’s number one flat-fee investment platform, with assets under administration approaching £55bn and over 400,000 customers.