Fitch Affirms AEGON Group, U.S. Operations Ratings; Outlook Stable.

CHICAGO -- Fitch Ratings has affirmed the 'AA+' insurer financial strength (IFS) ratings of AEGON Group, U.S. Operations (AEGON Group). The Rating Outlook is Stable.

AEGON N.V. Group Treasury issues all new debt for its country units and AEGON N.V. guarantees the debt assumed in U.S. acquisitions. Fitch affirmed today AEGON N.V.'s issuer default rating of 'AA' (see separate release published today). In addition, Fitch has affirmed Transamerica Corp.'s senior debt, AEGON Funding Corp.'s senior debt, Transamerica Finance Corp.'s senior debt and MTN ratings and Commonwealth General's medium-term note ratings at 'AA-'. The Rating Outlook is Stable. See detailed ratings list below.

The very strong IFS ratings of AEGON Group reflect the absolute and relative scale of its diversified operations, which allow it to compete effectively in all of its major U.S. retail and institutional product segments; sound asset quality, very strong consolidated statutory capitalization, and the effective management of an extensive network of well-established distribution channels.

Additional strengths include strong pricing and risk management discipline and capabilities, demonstrated through a global process that identifies and optimizes risk tolerances and is integrated into each business unit within each of the country units. This framework has resulted in the modification or elimination of certain product features and scaled-back exposures where required returns were not feasible or risk levels were not acceptable.

Rating concerns include modest growth in cash and invested assets, which increased 1% through the first nine months of 2006. Surrenders on AEGON Group's large block of fixed annuities have increased, although not outside pricing expectations. The company has adjusted the duration of the assets backing this portfolio and has purchased interest rate caps to offset the disintermediation risk to future earnings.

Fitch believes that the fundamental earnings power of the company is solid as indicated by pretax operating earnings under IFRS and the embedded value results for AEGON Americas (including Canadian businesses). Reported operating earnings before tax for AEGON Americas increased 16% to US$1,965 million through the first nine months of 2006, demonstrating solid management of persistency, expenses, asset/liability matching and crediting rate strategies. The value of new business increased almost 23% to US$313 million through the first nine months of 2006, indicating the achievement of pricing standards and risk tolerances.

Fitch affirms the following insurance subsidiaries' IFS ratings at 'AA+' with a Stable Outlook:

--Life Investors Insurance Company of America;

--Monumental Life Insurance Company;

--Peoples Benefit Life Insurance Company;

--Stonebridge Life Insurance Company;

--Transamerica Financial Life Insurance Company;

--Transamerica Life Canada;

--Transamerica Life Insurance Company;

--Transamerica Occidental Life Insurance Company;

--Western Reserve Life Assurance Co. of Ohio.

Fitch affirms the short-term IFS ratings of the following insurance subsidiaries' at 'F1+':

--Monumental Life Insurance Company;

--Transamerica Financial Life Insurance Company;

--Transamerica Life Insurance Company;

--Transamerica Occidental Life Insurance Company.

Fitch affirms the following Monumental Global Funding III's secured notes program and outstanding issues at 'AA+' long-term with a Stable Outlook:

--US$500 million due Dec. 20, 2007;

--US$250 million due Jan. 25, 2013;

--US$300 million due Jan. 15, 2014;

--US$400 million due Jan. 15, 2014;

Fitch affirms Monumental Global Funding III's short-term rating at 'F1+' on the following issue:

--US$500 million due Dec. 20, 2007.

Fitch affirms the following Monumental Global Funding II's secured notes program and outstanding issues at 'AA+' with a Stable Outlook:

--US$100 million due May 7, 2007;

--US$84 million due May 17, 2007;

--US$100 million due June 19, 2007;

--US$300 million due June 29, 2007;

--US$600 million due Sept. 13, 2007;

--US$250 million due Nov. 30, 2007;

--US$500 million due Mar. 3, 2008;

--US$500 million due Apr. 25, 2008;

--US$250 million due July 15, 2008;

--US$500 million due Jan. 9, 2009;

--US$200 million due Mar. 25, 2009;

--US$200 million due June 15, 2009;

--US$400 million due July 30, 2009;

--US$300 million due Sept. 22, 2009;

--US$350 million due Mar. 15, 2010;

--US$175 million due June 16, 2010;

--US$250 million due July 14, 2011;

--US$150 million due June 29, 2012;

--US$200 million due Oct. 25, 2013;

--US$500 million due May 26, 2016;

--US$250 million due July 18, 2016;

Fitch affirms the following Monumental Global Funding Ltd's secured notes program, and issues outstanding issues at 'AA+' with a Stable Outlook:

--CHF300 million due Feb. 14, 2007;

--GBP150 million due Mar. 20, 2007;

--US$100 million due Oct. 15, 2008;

--EUR400 million due Mar. 13, 2009;

--EUR250 million due July 15, 2009;

--GBP55 million due Aug. 3, 2009;

--GBP225 million due Feb. 25, 2010;

--US$100 million due June 15, 2011;

--AUD 200,000 due Nov. 8, 2011;

--GBP200 million due Jan. 18, 2013;

--GBP150 million due Jan. 30, 2014;

--MXN1,000 million due Mar. 17, 2016;

--EUR100 million due Feb. 2, 2021.

Fitch affirms Transamerica Corp's ratings as follows with a Stable Outlook:

--IDR affirmed at 'AA'

--US$100 million debentures due Mar. 1, 2008 affirmed at 'AA-'.

Fitch affirms AEGON Funding Corp.'s senior debt rating as follows with a Stable Outlook:

--US$500 million due Dec. 15, 2020 affirmed at 'AA-'.

Fitch affirms the following Transamerica Finance Corp.'s senior debt and medium term note ratings with a Stable Outlook:

--US$50 million due Sept. 1, 2007 affirmed at 'AA-';

--US$147 million due Sept. 15, 2008 affirmed at 'AA-';

--US$133 million due Mar. 1, 2010 affirmed at 'AA-';

--US$200 million due Sept. 1, 2012 affirmed at 'AA-';

--US$10 million due Jan. 14, 2009 affirmed at 'AA-';

--US$10 million due Jan. 26, 2009 affirmed at 'AA-';

--US$11 million due Jan. 28, 2009 affirmed at 'AA-';

--US$10 million due Dec. 6, 2010 affirmed at 'AA-';

--US$15 million due Dec. 6, 2010 affirmed at 'AA-'.

Fitch affirms the following Commonwealth General's medium term note ratings with a Stable Outlook:

--US$10 million due Nov. 12, 2007 affirmed at 'AA-';

--US$8 million due Mar. 15, 2015 affirmed at 'AA-';

--US$1 million due Apr. 28, 2015 affirmed at 'AA-';

--US$5 million due Mar. 15, 2021 affirmed at 'AA-';

--US$10 million due Jan. 21, 2022 affirmed at 'AA-';

--US$5 million due Mar. 28, 2025 affirmed at 'AA-';

--US$5 million due Apr. 21, 2025 affirmed at 'AA-';

--US$24 million due June 2, 2025 affirmed at 'AA-';

--US$5 million due Nov. 10, 2025 affirmed at 'AA-';

--US$3 million due Jan. 23, 2026 affirmed at 'AA-';

--US$11 million due Mar. 6, 2026 affirmed at 'AA-'.

Fitch affirms the following trust preferred ratings for Transamerica Capital II, III, respectively, with a Stable Outlook as follows (amounts tendered in 2006 excluded):

--US$87 million due Dec. 1, 2026 affirmed at 'A+';

--US$46 million due Nov. 15, 2037 affirmed at 'A+'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.