Q3: OCG target raised due to one-off items

Aegon delivered good results, surpassing expectations with higher-than-expected OCG. As a result, the company has revised its guidance for OCG in FY23 from >€1bn to ~€1.2bn. This will be driven by a strong performance in the U.S., but mainly by non-recurring items. Before the increase to the guidance the company had projected an OCG level of €1.2bn no earlier than 2025. We welcome the growth in the U.S. market, helping to offset the weak performance of the UK retail and AM businesses.

H1 23: Results in line but a light Solvency ratio

Aegon’s H1 23 results were broadly in line with expectations. However, concerns were expressed regarding its CSM figures and a shortfall in meeting the Solvency II ratio consensus. Following the separation from its Dutch business, subsequently merged with a.s.r., the company made the decision to move its legal headquarters to Bermuda. Consequently, the role of group supervisor will be assumed by the Bermuda Monetary Authority (BMA).

Captain America(s) drives the group for now

Aegon published a good 1Q 23 trading update. The firm is now widely exposed to the Americas since its Dutch business will be merged with A.S.R (close expected in the H2 23). Fortunately the quarter was strong as the segment has proven to be highly volatile in recent quarters (and could very well be again). We would prefer to see the firm broken up.

Let the distribution story begin

Aegon’s Q4 22 results were positive thanks to both strong operations and an early share buy-back program. The disposal of the Netherlands’ business to a.s.r will yield additional capital, thus turning Aegon into a distribution story in support of the share price. We are not buyers of the long-term story but the evidence is that the short-term newsflow will be more than welcome within an unstable macroeconomic context.

Aegon’s results confirm our lack of appetite for the a.s.r. transaction

Aegon’s results were a miss on operations, excluding fair value adjustments. The only segment that to deliver a strong performance was The Netherlands, which will be ceded to a.s.r. The Q3 22 results confirmed that, for the next couple of years, the firm’s equity story will be based on shareholder distributions, which should underpin the share price but will not make it an outlier.

A favorable environment

Aegon delivered a terrific set of operational numbers, beating consensus across all business lines. This was due to an interest rate environment which was beneficial to the Life insurer, which saw its OCG and FCF ahead of expectations, certainly feeding luscious distributions.

The Life cycle

Aegon’s Q1 22 results were good on an operating basis however profitability was hit by non-operating items, namely fair value items, as a result of tumbling equity markets. The strong capital position offers the firm a window to distribute extra capital to shareholders.

Improving operations and very strong performance from alternatives

A very strong set of results, showing the firm’s agility in these low rate environments. The operating plan is being implemented smoothly, while US mortality claims are decreasing. The dividend increased and there is much optimism ahead while rates are unlikely to ramp up tomorrow.

The restructuring plan pays-off

Aegon’s results show that the insurer is progressing well with its strategic initiatives. Not only is the insurer ahead of its plan, but it also benefited from better-than-expected commercial results. The firm looks well oriented to improve profitability and yield.

Solid recovery of operating earnings

Aegon announced a net loss of €147m in H2 20 and the full-year net income stood at €55m. The sharp decline was affected by adverse fair value item movements (€1,150m). In terms of operating performance, the insurer posted positive figures. The H2 20 underlying earnings before tax reached €1,029m, up 7.1% yoy. Except for the UK, all business lines recorded a positive trend in their operating earnings. The Solvency II ratio was 196%. The proposed final dividend is €0.06/share.

Heavy US bill

The rapid pandemic outbreak in the US led to deep changes in assumptions (€-834m), fair value losses (€-760m) and the suspension of a cash remittance. The American business, at the heart of Aegon’s profitability, is now a real source of concern. The other business units showed resilience. Management announced the withdrawal of its financial targets and a declined interim dividend to €0.06/share despite a solid Solvency II ratio (195%). Aegon will exit unprofitable markets and reallocate capital

A first missed target

Aegon released Q1 20 figures, marked by a strong net income (€1,270m) coming from fair value gains. The insurer succeeded also in protecting its Solvency II ratio (208%). Underlying earnings before tax was €366m, reflecting adverse mortality and impacts from lower interest rates in the Americas. The Dutch and UK operations showed resilience. Aegon took measures to preserve its profitability, including Variable Annuity repricing and coverage restriction. We expect more affected figures in Q2 due

The growing pressures on US business disturb

Aegon released FY 19 pre-tax underlying earnings of €1,973m, down 4.8% yoy, but net profit improved to €1,528m. The Americas continued to be the main generator of earnings (57% of the group one) and gross cash (60% of the remitted cash), despite the difficult economic context. Contrary to last year, net income benefited from lower fair value losses (€226m) and the model & assumption changes and restricting costs (€281m). The proposed final dividend is €0.16/share.

More complicated than expected

Aegon’s H1 19 pre-tax underlying earnings of €1,010m were down 5% yoy, but net profit jumped to €618m. The underlying result was affected by the impact of lower fee income on Retirement Plans and Variable Annuities and higher investments in the Americas. The European and Asian businesses posted slightly higher earnings. The proposed interim dividend is €0.15/share. Aegon respected some fixed targets, but the current volatility in the markets could be harmful to its FY 19 profits.

The good deal with Santander

The partnership between Aegon and Banco Santander is not new. It began in 2013. Spain is not particularly a cornerstone in the profitability of the Dutch insurer, but the reinforcement of the relationship with the leader in the banking sector would allow it to progress in the implementation of its recovery plan.

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