Kames rebranding key to Aegon's UK intentions?

Rebranding exercises usually follow on from changes of ownership or mergers, so many in the fund management industry were surprised by the news that AEGON Asset Management UK is to be renamed Kames Capital.

The firm, which can trace its roots back to Edinburgh in 1831 with the founding of Scottish Equitable Life Assurance Society, is now in its third incarnation. Its Scottish insurer parent was bought by Amsterdam-based AEGON Group in 1998 (which three years ago received a €4.1bn Dutch government bailout loan to prevent its collapse, finally repaying this sum in June).

Following the takeover, Scottish Equitable Asset Management as a brand continued for a further three years before giving way to AEGON Asset Management in 2001. A decade later Kames Capital has been born.

But why? No company rebrands for the fun of it, with the costs of such exercises (involving expensive changes to websites, literature and buildings) running into at least six figures, if not millions.

One explanation may be that AEGON is looking to offload its UK business, which has been going through a tough spell recently with major redundancies and cost cutting programmes - but that it wants to keep Kames Capital.

AEGON UK posted a 50% drop in second quarter profits as the provider continues to foot the bill for administrative problems at Scottish Equitable (it was fined £2.8m by the FSA and ordered to pay £60m in redress). Reported earnings were £9m for the UK arm, down from £18m over the same period last year, as £12m was paid in customer redress and £6m incurred running the redress scheme. Aegon’s pension business was worst hit, posting a £7m loss.

There has been speculation for some time that Aegon might be looking to get AEGON UK in good order for sale (its restructuring programme and cost saving targets are aimed to be completed by the end of 2011). Indeed, only last month it announced it had sold its UK-based life and pensions business Guardian to European private equity group Cinven, for £275m.

But its £49bn UK asset management arm, which manages fixed income, equity, property and multi-asset investments, has a good reputation, a global reach and is likely a business Aegon will want to retain. Therefore a change of name now would be helpful in keeping it distinct from the parts of the UK business Aegon doesn’t want.

One downside to doing this of course is the unease it may spread among the major intermediaries, such as large consultants, dealing with Kames. They may infer a major change is coming in the way the business operates and hence become less confident about recommending the asset manager to clients.

(And in case you were wondering a kame is apparently an irregularly shaped hill or mound composed of sand, gravel and till that accumulates in a depression on a retreating glacier, and is then deposited on the land surface with further melting of the glacier.)