Aegon reports second half year 2023 results
IFRS results
Net result of EUR 0 million with operating result offset by realized losses on investment portfolio; net loss of EUR 199 million for the full-year
Operating result of EUR 681 million, down 32% due to previously executed management actions and one-time benefits in the prior period. Full-year 2023 operating result of EUR 1,498 million, a decrease of 17% from EUR 1,802 million in 2022
Shareholders’ equity reduces by EUR 0.7 billion to EUR 7.5 billion following EUR 1.1 billion capital returns. Shareholders’ equity per share remains stable at EUR 4.27
Capital generation, cash and capital management
Operating capital generation before holding funding and operating expenses increases by 16% compared with the second half of 2022 to EUR 660 million and to EUR 1,280 million for the full-year
Capital ratios remain robust, above their respective operating levels
Cash Capital at Holding at EUR 2.4 billion. EUR 829 million of the announced EUR 1.5 billion share buyback completed at year‑end; reduced financial leverage to target level of around EUR 5 billion
Free Cash Flow of EUR 429 million includes special dividend from Aegon AM of EUR 75 million; full-year Free Cash Flow of EUR 715 million exceeds guidance of around EUR 600 million
Proposed final 2023 dividend of EUR 0.16 per common share, bringing the full-year dividend to EUR 0.30 per common share, up 30% versus the full-year 2022 dividend
Lard Friese, Aegon CEO, commented:
“The second half of 2023 saw Aegon maintain commercial momentum, driven by the strong performance of our US business, Transamerica, as well as our UK workplace business and our joint venture in Brazil. Aegon’s operating capital generation (OCG) from the units of EUR 660 million was solid during the period, bringing the total OCG for 2023 to EUR 1,280 million, exceeding the initial guidance for the year. Our business units remained well capitalized and our holding cash position continued to be robust. Free cash flow amounted to EUR 429 million for the second half of 2023, contributing to a total of EUR 715 million for the year, enabling us to exceed our guidance of EUR 600 million. The IFRS operating result of EUR 681 million was lower than in the second half of 2022, reflecting one-time benefits in 2022 that did not recur in 2023, as well as the impact of announced management actions in 2023.
The contrasting trend in our IFRS results compared to our OCG results is caused by differences in the timing of recognition of earnings between the two frameworks. OCG continues to be the primary lens by which we evaluate business performance and steer the company.
At our Capital Markets Day (CMD) in June of last year, we announced Transamerica’s strategy to become America’s leading middle market life insurance and retirement company. In 2023, Transamerica again delivered a strong performance. The Individual Solutions business generated new life sales of USD 486 million, an increase of 13% compared with the prior year and the highest sales level in the past eight years. The number of agents at World Financial Group (WFG) grew by 18% compared with a year earlier to almost 74,000. Written sales of mid-sized plans for our Workplace Solutions business amounted to USD 6.7 billion, an increase of 72% compared with the prior year. This was driven by growth in sales of both single employer plans and pooled plans. Meanwhile, we continued to actively manage our Financial Assets, including recent actions to reduce the exposure of Transamerica’s capital ratio to equity market movements.
Our UK Workplace platform also performed well. Despite the loss of a large, low margin pension scheme in the third quarter, we reported positive net inflows for 2023 and expect continued net inflows as a result of the onboarding of new schemes and higher net deposits on existing schemes.
At the same time, both Aegon’s UK Retail platform and asset management business experienced net outflows as they were adversely affected by the macro-economic environment in 2023.
Moving to our insurance joint ventures: in Brazil, new life sales at Mongeral Aegon Group increased by 37% to EUR 144 million reflecting both business growth and Aegon’s increased economic stake, while new life sales in China increased by 19% to EUR 103 million in 2023.
We have completed 76% of our current EUR 1.5 billion share buyback program (on February 23, 2023) and we have executed upon our planned de-leveraging. We have proposed a final dividend of 16 eurocents per share. On this basis, the total dividend paid for the full‑year 2023 will be 30 eurocents, in line with our target and up 30% compared with 2022.
I am very proud of everything the teams have achieved in 2023, and I am grateful for all their work during another transformational year. We will continue to work hard executing our strategy in 2024. Our strong commercial performance, together with the important steps we took to realign our company, have given us a solid foundation on which to sustainably grow our dividend per share. We also look forward to presenting the strategy for our UK business in more depth during a teach-in session on June 25 this year.”
Strategy
Aegon’s ambition is to build leading businesses that offer customers investment, protection and retirement solutions. Its portfolio of businesses includes wholly owned subsidiaries in the US and UK, and a global asset manager. In addition, Aegon has partnerships in Spain & Portugal, Brazil, and China, which create value by combining the strength of local partners with Aegon’s international expertise. In the Netherlands, Aegon generates value via a strategic shareholding in a market leading insurance and pensions company. Aegon is taking significant steps to improve its performance and create sustainable value for all of its stakeholders.
Aegon’s businesses in the US have been divided into Financial Assets and Strategic Assets. The aim is to reduce Aegon’s exposure to Financial Assets and improve the predictability of capital generation from these assets. Aegon intends to, over time, reallocate capital from Financial Assets to growth opportunities in Strategic Assets, partnerships, and the global asset manager. Exposure to businesses outside of Aegon’s core focus has been largely eliminated over recent years, most recently with the divestment of the business in India, which was completed on February 23, 2024.
Throughout its transformation, Aegon aims to maintain a solid capital position in its business units and at the Holding. Through proactive risk management actions, Aegon is improving its risk profile and reducing the volatility of its capital ratios. This is underscored by the capital strength conveyed in this press release.
The next chapter in Aegon’s strategy is expected to lead to operating capital generation from its units of around EUR 1.2 billion, and of free cash flow of around EUR 800 million by 2025. Aegon aims to grow its dividend per share to around EUR 0.40 over 2025, barring unforeseen circumstances and subject to the necessary approvals. Gross financial leverage is expected to remain at around EUR 5 billion.
Transaction with a.s.r.
On July 4, 2023, Aegon announced the completion of the combination of its Dutch pension, life and non-life insurance, banking, and mortgage origination activities with a.s.r., and the beginning of its asset management partnership with a.s.r. The associated EUR 1.5 billion share buyback program was 54% completed on December 31, 2023, and is expected to be fully executed by June 30, 2024.
Redomiciliation to Bermuda and change of group supervisor
Following the closure of the transaction with a.s.r., Aegon no longer has a regulated insurance entity in the Netherlands. Under Solvency II rules, Aegon’s former group supervisor, the Dutch central bank, could no longer remain Aegon’s group supervisor. Following discussions in the college of supervisors, the Bermuda Monetary Authority (BMA) informed Aegon that it would become its group supervisor if the company were to move its legal domicile to Bermuda.
On September 30, 2023, Aegon’s Extraordinary General Meeting of Shareholders (EGM) approved the cross-border conversion of Aegon into a Bermuda Limited (Ltd.) company. After the completion of the EGM, the change of Aegon’s legal seat to Bermuda was effectuated and, as a result, the company became a Bermuda entity: Aegon Ltd. On October 1, 2023, the BMA became Aegon’s group supervisor.
Dutch insurer Aegon appoints NN Group’s Friese to succeed Wynaendts as CEO
Aegon announces that its Supervisory Board intends to propose the appointment of Lard Friese as Chief Executive Officer to the Annual General Meeting of Shareholders. He will join the company as CEO-designate effective March 1, 2020 and succeed Alex Wynaendts at the AGM to be held on May 15, 2020.
Mr. Friese joins Aegon from NN Group where he currently is Chief Executive Officer. He has close to 30 years’ experience in the financial services industry, including at Aegon between 1993 and 2003. The intended appointment has been approved by the company’s regulators and positively advised upon by Aegon’s works council.
Statement of William Connelly, Chairman Supervisory Board”We are very pleased to announce our intention to appoint Lard as Aegon’s new Chief Executive Officer after a thorough selection process from a strong bench of candidates. Lard is an outstanding leader with a proven track record and extensive experience in the insurance sector, including ten years at Aegon. He has led a wide range of businesses and inspired teams to achieve market leading positions.
Following 11 years under Alex’s leadership, in which the company has undergone a successful strategic and financial transformation, we started a succession process in November last year. The company is now optimally positioned for the next phase of development, and Lard’s intended appointment is a natural next step in building a sustainably growing and profitable business. The Supervisory Board is very grateful for Alex’s continued leadership and expresses its gratitude for his commitment and enormous contribution to Aegon over more than two decades.”
Statement of Alex Wynaendts, Chief Executive Officer”It has been a great privilege to lead Aegon during these past 11 years and to work with so many dedicated colleagues around the world to help our nearly 30 million customers secure their financial futures. I am very proud that we have successfully transformed Aegon and the company is now well positioned to realize its full potential. This creates a natural moment for me to hand over to my successor, who I welcome back to Aegon. I look forward to working together with my colleagues on executing on our strategic agenda until our AGM in 2020.”
Mr. Wynaendts joined Aegon in 1997 and was appointed as a member of the company’s Executive Board in 2003. He became Chief Operating Officer in April 2007, and was appointed CEO and Chairman of Aegon’s Executive Board the following year.
Statement of Lard Friese”I am delighted to be joining Aegon as the next Chief Executive Officer at an exciting time for the business. Aegon has a long history of innovation, developing valued-added products and services for its customers, and well-known brands which provide financial security for people across the globe. I look forward to working together with the management team to fully capitalize on the company’s opportunities.”
Mr. Wynaendts will work closely together with Mr. Friese from March onwards to ensure a seamless leadership transition, and he will remain available as advisor to the company until September 30, 2020.
Aegon pay out GBP128.6m in protection claims in 2018
Aegon UK has published individual protection claims data which shows a total of £128.6 million was paid in claims across all protection benefits, helping more than 1,552 families and businesses in 2018.
The percentage of life and critical illness (CI) claims paid remains broadly in line with 2017 at 98% and 93% respectively. Life protection claims The latest figures from Aegon UK reveal that 98% of all life claims were paid in 2018 to 742 families and businesses, representing payments amounting to £67.1 million. The average size of claim paid was £90,435 and the average age at claim was 62 years old. Cancer continued to be the most common cause of death for a life claim (47%), followed by heart-related conditions (21%). Terminal illness claims Life policies also include the sometimes overlooked terminal illness benefit, which means the policy will pay out on diagnosis of an illness, where life expectancy is 12 months or less. These claims are assessed separately from life protection claims. Twenty three percent of life claims were paid early under Aegon’s terminal illness definition and Aegon paid 95% of all terminal illness claims it received. In total, £23 million was paid for terminal illness claims in 2018, helping more than 200 families and businesses put their finances in order before the insured person’s death. Critical illness claims Aegon paid 93% of critical illness claims, which represented payments of £37.4 million. The average size of claim paid was £80,644 and the average age at claim was 50 years old. The ‘big three’ critical illnesses – cancer, heart attack and stroke – accounted for 81% of critical illness claims. Cancer alone accounted for 62% of critical illness claims in 2018, followed by heart attacks (12%) and strokes (7%). Of the critical illness claims declined in 2018, nearly 5% were due to the definition not being met and the remaining 2% were due to misrepresentation. Simon Jacobs, Head of Claims and Underwriting at Aegon UK, said: “These figures represent people, businesses and families who are going through some of the most difficult times in their lives, and we’re proud to have been able to help them through that. “The claim is the heart of every protection policy. When customers have to make a claim and deal with the emotional and financial upheaval a death or illness can bring, our experienced team of claims assessors support them through every step. “In terms of figures, our claims performance is consistent – paying 98% of life, 93% of critical illness and 93% of income protection claims. “We’ve reported our claims statistics for around eight years and over this time we’ve worked hard to reduce incidents of misrepresentation and make sure that customers receive the best claims experience. “The customer experience at point of claim is just as important as the number of claims paid.” Income protection claims Aegon’s income protection claims experience reveals that last year, Aegon UK paid 93% of new claims received, and over £561,000 in regular monthly benefits. Cancer was the most common reason for IP claims (27%) in 2018. Simon Jacobs, Head of Claims and Underwriting at Aegon UK, on income protection claims figures: “The low number of claims we continue to receive on this type of protection policy can impact the figures dramatically. With only 29 claims received last year, a single decline can make a big difference. The number of claims we’ve paid has remained static. However, while we don’t believe this data can provide any meaningful like-for-like comparison, we continue to share it for the sake of complete transparency for advisers and customers.” These figures have been compiled using the ABI guidance for calculating claims statistics.