Moody's affirmed the Aa3 insurance financial strength (IFS) ratings on the operating companies in the AEGON USA, and maintained the outlook at stable on all ratings. AEGON USA is a wholly-owned subsidiary of AEGON NV.

Moody's rates nine operating life insurance companies in the AEGON USA organisation. "The AEGON USA companies all carry the same IFS rating since there is a high degree of integration among them within the AEGON USA organisation, and many of the business units share the same legal entities when writing business" says Moody's vice president-senior credit officer, Robert Donohue.

The rating on AEGON USA is based primarily on the group's leading position in the US life insurance and asset accumulation markets, and reflects the fact that AEGON USA is of critical importance to its ultimate parent company, AEGON NV. AEGON USA is the largest part of AEGON NV and accounts for a majority of the group's global assets, revenue and income. "The rating is also based on AEGON USA's historical good profitability in its core businesses, which is enhanced by its track record of successfully controlling expenses," added Donohue. In addition, the rating also incorporates AEGON USA's good quality investment portfolio, ample liquidity, and capable management team.

Somewhat mitigating these strengths is AEGON USA's significant exposure to the equity markets, primarily from its large book of variable annuities. Moody's also feels that there is below average interest coverage at AEGON USA Life Group, when AEGON NV's interest coverage is used as a proxy for AEGON USA. In addition, AEGON USA has significant exposure to both retail and institutional spread-based liabilities.