Donald J. Shepard

Chairman of the executive board, AEGON N.V.

Nationality: American.

Born: 1946.

Education: University of Chicago, MBA.

Family: Married Rosie (maiden name unknown).

Career: Life Investors, 1970–1985, various positions; 1985–1989, executive vice president and chief operating officer; AEGON USA, 1989–1992, president and chief executive officer; 1992–2002, chairman, president, and chief executive officer; AEGON N.V., 2002–, chairman of the executive board.

Address: AEGON N.V., AEGONplein 50, P.O. Box 202, 2501 CE The Hague, The Netherlands;

■ Donald J. Shepard, who earlier served as the first chairman, president, and chief executive officer (CEO) of AEGON USA, in April 2002 took over as chairman of its parent company, AEGON N.V. A member of the Dutch-based company's executive board since 1992, Shepard replaced Kees J. Storm, who in his nine years as chairman aggressively transformed AEGON into one of the world's top life-insurance companies. For Shepard it was a tough act to follow. However, despite a worldwide economic downturn and the resulting weakness in financial markets, Shepard acquitted himself well, guiding AEGON through troubled times and expanding into new markets.

In 2003, the first full year under Shepard's watch, AEGON N.V.'s net income increased by nearly 39 percent, rising to $2.25 billion from $1.6 billion the previous year. Revenue in 2003 totaled $36 billion, up almost 10 percent from about $32.8 billion in 2002. AGEON's net profit margin improved from 5 percent in 2002 to 6.3 percent in 2003 but was still well below the 2001 profit margin of 7.5 percent. In announcing AEGON N.V.'s financial results for 2003, Shepard observed in a company press release: "We feel better about business

Donald J. Shepard. © Najlah Feanny/Corbis.
Donald J. Shepard. ©
Najlah Feanny/Corbis

than a year ago. The profitability of our business has been strengthened by our actions to improve margins," as well as "improvements in the equity and credit markets" (March 12, 2004).


Although based in The Hague, capital of the Netherlands, AEGON N.V. conducted roughly 70 percent of its business in the early 2000s outside the tiny European country. By far its biggest operating group, AEGON USA, which Shepard headed for more than a decade, accounted in 2003 for just over 60 percent of its parent's total revenue, while operations in the Netherlands and the United Kingdom generated roughly 30 percent and 7.5 percent of total net income, respectively. The company also maintained smaller operations in a number of other countries, including Canada, China, Germany, Hungary, Spain, and Taiwan.

Born in 1946 in the United States, Shepard in 1970 earned a master's degree in business administration from the University of Chicago. Shortly after receiving his degree, he went to work for Life Investors, an insurance holding company headquartered in Cedar Rapids, Iowa. Over the next 15 years, Shepard held a wide variety of management positions, gradually working his way into the company's top executive ranks. In 1985 he was appointed executive vice president and chief operating officer of Life Investors, which in 1982 had been sold by founder Ronald Jensen to AEGON N.V. for $200 million.

At the end of the 1980s, when AEGON N.V. consolidated its far-flung U.S. holdings into AEGON USA, Shepard was named president and chief executive officer of the newly formed company. In 1992 he was given the added title of chairman of AEGON USA and joined the executive board of AEGON N.V. Over the next decade, under Shepard's direction, AEGON USA expanded aggressively, most notably acquiring the insurance units of Providian Corporation for roughly $3.5 billion in January 1997 and San Francisco-based Transamerica Corporation for $9.7 billion two years later. By the end of the 1990s AEGON USA, which was then headquartered in Baltimore, had moved into the top three American life insurance groups in terms of total assets and premiums written.


On September 11, 2001, while Shepard was still serving as chairman, president, and chief executive officer of AEGON USA, terrorists attacked America, delivering a blow to the country that was to have a widespread impact on the worldwide economy. In an interview with Chief Executive magazine shortly after 9/11, Shepard predicted that business-security concerns in the wake of the attack were likely to lead to an overreaction, resulting in sharply reduced business travel. Although he said he expected the American business community would eventually get past the crisis, he suggested that important lessons might be learned from countries like Israel. "It's interesting to see that there are a number of successful businesses in Israel and they have had to deal with terrorism in the streets for a long time," he said (November 2001).

Less than two months after the attack, AEGON N.V.'s supervisory and executive boards announced on November 8, 2001, that Shepard would succeed Kees J. Storm when the latter retired in April 2002. For Shepard, the timing of his appointment was less than auspicious; AEGON saw its capitalization fall 11 percent at the end of June 2002. As a result, Standard & Poor's announced that it would be forced to cut the company's credit rating unless AEGON could boost its capital. Dutch-based Vereniging AEGON, the insurer's largest shareholder, came to the rescue, announcing it would sell a 25 percent interest in the company in a bid to bolster AEGON's capitalization.


The combined effects of weakness in the equity markets, low interest rates, and bond-credit defaults took their toll on AEGON N.V.'s bottom line in 2002. The company's net income fell to $1.6 billion, down more than 24 percent from $2.1 billion in 2001. Revenue in 2002, however, rose almost 15 percent to $32.7 billion from about $28.5 billion the previous year. In announcing AEGON's 2002 financial performance, according to a company news release, Shepard said: "By continuation of our strategy we are enhancing our distribution capabilities in existing and new markets to reach more customers while improving the operating efficiency of our organization" (March 6, 2003).

In a July 2003 interview with the Wall Street Transcript , Shepard attributed increased competition in the international insurance market to changes in government policy and financial markets. "It's always been competitive," he said, "but we are now experiencing the most rapid changes to our business model in a generation." As examples of the changing competitive landscape, Shepard cited "greater cost efficiencies, changing product design and pricing [and] adjusting commissions and product benefits" (July 22, 2003).

At AEGON's November 2003 Analyst and Investor Conference in Orlando, Florida, Shepard elaborated on the important role played by distribution, which he called the insurer's "most important driver of growth," according to a report carried on the Fair Disclosure Wire (November 10, 2003). He said that key to AEGON's distribution strength in the United States and Netherlands, its two biggest markets, had been the company's multichannel distribution system. Shepard said AEGON was moving to introduce similar distribution systems in other markets.


In March 2004 Shepard announced sharply improved results for AEGON N.V. in 2003. The insurer's profit jumped nearly 39 percent on an increase in sales of just under 10 percent. According to a company press release, Shepard credited the company's strategy of aggressively expanding its multi-channel distribution system into more and more of its markets. As an example he cited the successful implementation of that system into AEGON's Taiwan market. Looking ahead, he said the company was well positioned to strengthen its core activities in such new markets as China, Slovakia, and Spain. The insurer moved to gain a foothold in the Chinese market in mid-2002 when it reached agreement with China National Offshore Oil Corporation to launch a joint-venture life-insurance business in China, which opened for business in Shanghai in 2003. AEGON also use joint ventures to enter the Spanish market, reaching a strategic agreement in January 2004 with Caja de Ahorros del Mediterraneo (CAM), one of Spain's leading financial-services companies. Under the terms of the agreement, CAM's insurance subsidiary, Mediterraneo Vida, was to be spun off into a new holding company, to which AEGON would supply both its insurance-marketing expertise and a substantial infusion of capital.

In August 2003 Shepard, along with eight other international insurance-company executives, was elected to the board of directors of the New York-based International Insurance Society. The AEGON chairman also served on the boards of directors of CSX Corporation, Baltimore Symphony Orchestra, Financial Services Roundtable, U.S. Chamber of Commerce, Mercantile Bankshares Corporation, and Walters Art Gallery. He also served as a trustee of Johns Hopkins University and Johns Hopkins Health System Corporation.

See also entry on AEGON N.V. in International Directory of Company Histories .

sources for further information

"AEGON Buys Transamerica," United Press International, February 18, 1999.

"AEGON Completes Acquisition of Transamerica," .

"AEGON Moves to Boost Its Capital," Birmingham Post (England), September 16, 2002.

"AEGON Reports on Full Year 2003 Results, Positive Developments in Earnings," .

"AEGON Sells Transamerica Subsidiary to GE," Associated Press, August 7, 2003.

"AEGON's Analyst & Investor Conference—Day 1—Final," Fair Disclosure Wire, November 10, 2003.

"CAM and AEGON Have Reached Final Agreement on Strategic Partnership," .

"CNOOC Marches into Life Insurance Market Together with AEGON," AsiaInfo Services, May 17, 2002.

Crosson, Cynthia, "Dutch, U.S. Managers Blend Styles at AEGON," National Underwriter , April 8, 1991.

D'Allegro, Joseph, "Financial Service Reform Can Benefit Insurers," National Underwriter , November 8, 1999.

"Dutch Insurer AEGON Doubles Earnings," Associated Press, May 12, 2004.

"Dutch Insurer Launches JV," .

"Executive Chairman of AEGON Discusses Strategy within Changing Competitive Landscape," Wall Street Transcript , July 22, 2003.

Fairlamb, David, "Insurance: Full of Holes," BusinessWeek , September 23, 2002.

Ford, George C., "AEGON USA, Cedar Rapids, Iowa, Builds on Acquisition Strategy," Cedar Rapids Gazette , September 23, 1997.

——, "Cedar Rapids, Iowa, Insurance Company Grows Revenues, Employment," Cedar Rapids Gazette , March 10, 1999.

"Grupo Financiero Banamex Agrees to Purchase 48 Percent of AEGON's Share in Seguros Banamex AEGON and Afore Banamex AEGON," .

"Kees J. Storm, Chairman of the Executive Board of AEGON N.V. to Retire; Donald J. Shepard Appointed as His Successor," .

"Net Income EUR355 Million for Fourth Quarter; Net Income per Share EUR0.23," .

"Patrick S. Baird Named President and CEO of AEGON USA, Inc.," .

Young, Eric, "CEOs in an Age of Terrorism: Executives Weigh the Impact of a Long Military Retaliation and a Changing National Psyche," Chief Executive , November 2001.

—Don Amerman

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