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part 1
Capital Markets Day 2023: Transforming Aegon – The Next Chapter
Thu, June 22, 2023 at 7:00 AM GMT+2
Aegon to accelerate its strategy to create leading businesses in investment, protection and retirement solutions
Transamerica, Aegon’s US subsidiary, to accelerate growth and build America’s leading middle market life insurance and retirement company
Aegon on track to close a.s.r. transaction in the coming weeks and start associated share buyback
Strategy execution and active capital management to create significant financial flexibility at the holding company
Aegon will adapt its operating model to align with business profile; refreshed logo marks the next chapter in Aegon’s transformation and its sharpened operating model
New chapter in strategy expected to lead to increase in operating capital generation from units to around EUR 1.2 billion, free cash flow to around EUR 800 million and dividend per share to EUR 0.40 by 2025
The Hague, June 2022, 2023 - Aegon’s ambition is to build leading businesses offering customers investment, protection and retirement solutions. Today, Aegon presents the next chapter of this transformation. Aegon CEO, Lard Friese, will be joined by CFO Matt Rider, Duncan Russell, Chief Transformation Officer, Will Fuller, CEO of Transamerica – Aegon’s largest business unit – and other members of the management team of Transamerica to outline their plans to create value. The event, entitled “Transforming Aegon – The Next Chapter,” follows the successful execution of the first phase of the company’s transformation that was announced at Aegon’s 2020 Capital Markets Day (CMD).
Aegon CEO, Lard Friese, commented: “Today, Aegon is a more focused company with improved operational performance, a stronger balance sheet, and an enhanced risk profile. We have delivered on the plans outlined at our last Capital Markets Day. The transaction to combine Aegon’s Dutch pension, life and non-life insurance, banking, and mortgage origination activities with a.s.r. closes off the first chapter of Aegon’s transformation and enables us to accelerate the execution of our strategy.
“At today’s CMD, we will outline the steps we are taking to ensure that Transamerica, our US subsidiary, captures its full potential. Transamerica has had a long and proud history of making financial services available to the many, not just the few. We aim to accelerate Transamerica’s growth and build America’s leading middle market life insurance and retirement company. This rapidly growing market, representing 68 million middle income households, is the largest in the US and is relatively underserved by the financial services industry. Transamerica is well positioned to grow and to capture the opportunities in this market,” said Lard Friese.
Transamerica’s strategy consists of four focus areas. First, Transamerica will invest further in World Financial Group (WFG), its insurance distribution network of around 70,000 independent agents. WFG distributes Transamerica products, as well as those of other insurers. Its distinctive, nationwide network is the third largest agency force in the United States and the largest in Canada. WFG’s agents come from a wide range of diverse cultural backgrounds, and meet the needs of the communities in which they operate. Transamerica’s ambition is to increase the number of WFG agents to 110,000 by 2027, while at the same time improving agent productivity.
Second, Transamerica will invest in its product manufacturing capabilities and operating model in order to provide an improved and differentiated customer experience and to support sales growth. It will insource and redesign critical operational and administrative functions, including core customer services, that are currently managed by an external provider. As a result, Transamerica will be well positioned to grow its life insurance business sold through both WFG and third-party distributors.
Third, in Workplace Solutions, Transamerica aims to increase earnings from its retirement business which provides recordkeeping and investment services for US defined contribution plans, and advice to plan participants. With a focus on the mid-sized and pooled employer retirement plan market, Transamerica will invest to leverage its capabilities as a recordkeeper with the ambition to materially increase the penetration of the ancillary products and services it offers. In particular, it will build on its expertise in stable value investment options and individual retirement savings accounts.
Fourth, Transamerica will continue to reduce its exposure to Financial Assets and improve the level and predictability of its capital generation. Since the 2020 CMD, Aegon has released USD 1.5 billion of capital from its Financial Assets in the US. Looking forward, Transamerica will expand the scope of Financial Assets to include legacy Universal Life contracts, and take additional management actions which are expected to release another USD 1.2 billion of capital in the next five years. The financial flexibility this creates will be prioritized to further reduce exposure to Financial Assets.
In addition to sharing its plans for Transamerica, Aegon will provide an update on the a.s.r. transaction, which is expected to be completed in the coming weeks. Shortly after closing, Aegon expects to initiate the associated capital return of EUR 1.5 billion as announced on October 27, 2022, through a share buyback over a 12-month period. Post-closing, Aegon intends to hold its 29.99% strategic stake in a.s.r. to capture the value of cost and capital synergies associated with the integration of its former Dutch business into a.s.r.
Aegon is making progress on the review of the implications of the transaction with a.s.r for group supervision. The discussions with the college of supervisors, representing all local regulators of Aegon, are ongoing and no decisions have been made. Any further details will be made available if and when appropriate. Regardless of the outcome, Aegon intends to maintain its head office in the Netherlands. Its shares will remain listed on Euronext in Amsterdam and the New York Stock Exchange.