Aegon Ltd. · EURONEXT:AGN
Aegon — Q2 2022 Earnings Presentation
32 slides from Aegon's earnings presentation, Aug 11, 2022
Slide 1: 2Q 2022 Results
2Q 2022 Results Lard Friese Chief Executive Officer Matt Rider Chief Financial Officer August 11, 2022 Helping people live their best lives
Slide 2: 2Q22 results a testament to the strength of Aegon's strategy
2Q22 results a testament to the strength of Aegon’s strategy 1 Making progress on operational improvement plan and sustainability approach 2 Delivering a strong operating result and solid capital positions 3 Net result impacted by reinsurance rate increases in the US 4 Maintaining commercial momentu
Slide 3: Executing on Aegon's granular operating plan
Executing on Aegon’s granular operating plan Operational improvement plan (2Q 2022) Expense Growth in initiatives initiatives progress Number of • Continued implementation of the 819 239 208 1,266 initiatives operational improvement plan executed • Remaining confident to deliver target Expense deliv
Slide 4: Consistent delivery in US Strategic Assets
Consistent delivery in US Strategic Assets US – Individual Solutions US – Workplace Solutions New life sales New business strain Value of new life RP Middle-Market RP Middle-Market RP Middle-Market (in USD million) (in USD million) business written sales net deposits assets under admin. (in USD mill
Slide 5: Continued growth in NL, and muted growth in UK Strategic Assets
Continued growth in NL, and muted growth in UK Strategic Assets NL UK Mortgage Workplace Net growth Knab Workplace Retail Platform Revenues origination net deposits customers net deposits net deposits expenses/AuA gained/(lost) (in EUR billion) (in EUR million) (in 1,000 customers) (in GBP million)
Slide 6: Challenging environment for Asset Management; continuing performance in Growth Markets
Challenging environment for Asset Management; continuing performance in Growth Markets Asset Management Growth Markets (Spain & Portugal, China1, Brazil) Third-party Operating margin Operating result New life sales Value of new New premium net deposits Global Platforms Strategic (in EUR million) lif
Slide 7: 2Q 2022 Financial Results
2Q 2022 Financial Results Matt Rider Chief Financial Officer 7
Slide 8: Financial results
Financial results Addressable expense savings1 EUR 234 million EUR 250 million 1Q 2022 2Q 2022 Operating result EUR 562 million EUR 538 million 2Q 2021 2Q 2022 Operating capital generation2 EUR 435 million EUR 391 million 2Q 2021 2Q 2022 Free cash flow EUR 175 million EUR 318 million 2Q 2021 2Q 2022
Slide 9: Operating result of EUR 538 million reflects lower fees, partly offset by expense savings
Operating result of EUR 538 million reflects lower fees, partly offset by expense savings and better claims experience Operating result (2Q 2022, in EUR million) Change vs. 2Q 2021 Claims experience • EUR 5 million favorable mortality claims experience in Life Americas 236 -16% overall, including EU
Slide 10: Net loss of EUR 348 million driven by non-operating items and Other charges
Net loss of EUR 348 million driven by non-operating items and Other charges Net result (2Q 2022, in EUR million) Operating result 538 Non-operating items • Fair value loss driven by interest rate hedges in the US, partly Fair value items (206) offset by positive impact from rising credit spreads in
Slide 11: Capital positions of main units firmly above operating levels
Capital positions of main units firmly above operating levels Solvency II / RBC ratio 2Q 2022 • Positive contribution from management actions, including updates to the modelling of Index Universal Life reserves, partly offset by recapturing of US1 416% -8%-pts vs. 1Q22 liabilities from a captive rei
Slide 12: Cash Capital at Holding above the operating range
Cash Capital at Holding above the operating range Cash Capital at Holding (in EUR million) 318 88 • Gross remittances from all regions, 1,817 leading to Free cash flows to the Holding 1,680 of EUR 318 million in 2Q 2022 (543) 1,500 • EUR 88 million net impact from Operating divestitures and acquisit
Slide 13: Creating value from Aegon's Financial Assets
Creating value from Aegon’s Financial Assets Financial Assets highlights 2Q 2022 Hedge effectiveness • Currently engaging directly with external parties to discuss a potential US Variable reinsurance transaction on parts of the variable annuity portfolio Annuities 98% • Implemented long-term implied
Slide 14: Increasing free cash flow and operating capital generation expectations
Increasing free cash flow and operating capital generation expectations Cumulative free cash flow 2022 operating capital generation1 (2021 – 2023 in EUR billion) (in EUR billion) At least 2.2 Around 1.4 Around 1.2 1.4 – 1.6 1.1 0.8 Actuals CMD target Current outlook Actuals Earlier Current outlook 2
Slide 15: Concluding remarks
Concluding remarks Lard Friese Chief Executive Officer 15
Slide 16: Key messages
1 Making progress on operational improvement plan and sustainability approach 2 Delivering a strong operating result and solid capital positions Key 3 Net result impacted by reinsurance rate increases in the US messages 4 Maintaining commercial momentum in Strategic Assets despite adverse markets 5
Slide 17: Appendix
Appendix For questions please contact Investor Relations +31 70 344 8305 [email protected] P.O. Box 85 2501 CB The Hague The Netherlands Helping people live their best lives
Slide 18: Continued progress in managing the US Variable Annuities Financial Asset
Continued progress in managing the US Variable Annuities Financial Asset US Variable Annuities Performance Capital generation Dynamic hedge effectiveness1 (in USD million) (in %) 302 98% 228 99% 98% 97% (50) (120) 86% (693) 2Q21 3Q21 4Q21 1Q22 2Q22 2Q21 3Q21 4Q21 1Q22 2Q22 Developments Implemented l
Slide 19: Further delivery in the US LTC Financial Asset
Further delivery in the US LTC Financial Asset US Long-Term Care (LTC) Performance Actual to expected Progress on rate Capital claims ratio increase program generation (in %) (value of approved rate increases) (in USD million) 83% 77% 75% 138 118 52% 51% 87% of upgraded expectation 41 51 14 2Q21 3Q2
Slide 20: Further strengthened the Solvency II ratio of the NL Life Financial Asset
Further strengthened the Solvency II ratio of the NL Life Financial Asset NL Life book Performance Solvency II Remittances Operating capital ratio (in %) 200% (in EUR million) to Aegon NL generation (in EUR million) 172% 186% 79 50 186% 67 66 55 56 172% 50 Operating level (150%) 25 25 25 Min. divide
Slide 21: Group Solvency II ratio amounts to 214%
Group Solvency II ratio amounts to 214% Own funds (OF) and Solvency Capital Requirement (SCR) development (in EUR million) SII 210% +4% -3% -2% +1% +4% 214% • Solvency II ratio reflects the interim dividend of EUR 0.11 per (224) common share 367 19,067 • Market movements include the (335) unfavorabl
Slide 22: Key capital sensitivities
Key capital sensitivities Solvency II and RBC sensitivities (in percentage points, 2Q 2022) Scenario Group NL Life3 UK4 US5 US RBC6 Equity markets +25% +2% -2% -8% +11% +18% Equity markets -25% -7% -2% +9% -23% -33% Interest rates +50 bps -1% 0% -2% -1% -2% Interest rates -50 bps +1% 0% -1% +1% +2%
Slide 23: Well-diversified US investment portfolio with well managed interest rate risk
Well-diversified US investment portfolio with well managed interest rate risk Aegon US asset allocation1 at 2Q 2022 compared to industry2 Aegon US fixed income securities1 (General account Aegon US, 100% = USD 77.0 billion) (in USD billion, total USD 54.8 billion) 2.7% Cash 6.5% 1.4 2.9 1.6 3.2% 3.3
Slide 24: Defensive positioning of Aegon's US corporate bond portfolio
Defensive positioning of Aegon’s US corporate bond portfolio Public corporate bond portfolio US1 Public BBB corporate bond portfolio US2 (based on market value, in USD billion, at June 30, 2022) (based on market value, in USD billion, at June 30, 2022) 1% AAA 5% Financials 9% 5% 6% 6% AA 24% Consume
Slide 25: Well managed CML portfolio with conservative Loan to Value
Well managed CML portfolio with conservative Loan to Value (LTV) US Corporate Mortgage Loan (CML) portfolio LTV split US CML portfolio (based on amortized cost, in USD billion, at June 30, 2022) (based on amortized cost, at June 30, 2022) Multi-Family 53.4% 53.9% 15% 50.4% 52.0% Industrial Total 52.
Slide 26: Low impairment levels in the US general account
Low impairment levels in the US general account Impairments on US general account fixed income assets (in bps) 120 91 82 64 48 52 37 33 27 25 17 17 17 19 Average 9 8 8 21 1 2 4 2 1 3 1 4 (6) (2) (2) (9) (3) (4) ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’
Slide 27: Conversion of RBC to Solvency II
Conversion of RBC to Solvency II • Conversion methodology for US operations has been agreed with DNB, subject to regular review • Calibration of US insurance entities followed by subsequent adjustment for US debt and holding items - Calibration of US insurance entities is consistent with EIOPA’s gui
Slide 28: Leverage ratio benefits from debt reduction and increased shareholders' equity
Leverage ratio benefits from debt reduction and increased shareholders’ equity Gross financial leverage1 Gross financial leverage ratio (in EUR billion) (in %) 7.4 32.2% 7.0 30.7% 6.7 6.7 29.2% 28.6% 27.9% Senior 2.4 6.0 5.9 2.3 1.8 1.7 5.7 24.7% 1.2 1.3 22.5% 1.3 Hybrid 5.0 4.7 4.9 4.9 4.7 4.6 4.4
Slide 29: Main economic assumptions for the 2021-2023 targets
Main economic assumptions for the 2021-2023 targets1 Overall assumptions US NL UK Exchange rate against euro 1.2 n.a. 0.9 2021: 2% 2021: 4% 2021: 4% Annual gross equity market return (price appreciation + dividends) 2022 onwards 8% 2022 onwards 6.5% 2022 onwards 6.5% Main assumptions for financial t
Slide 30: Aegon Investor Relations
Aegon Investor Relations Stay in touch Upcoming events 2022 Contact Investor Relations Bank of America CEO Jan Willem Weidema +31 70 344 8028 September 21, 2022 Head of Investor Relations Conference, London Karl-Otto Grosse-Holz +31 70 344 7857 Aegon 3Q 2022 results November 10, 2022 Investor Relati
Slide 31: Investing in Aegon
Investing in Aegon Aegon ordinary shares Aegon New York Registry Shares (NYRS) • Traded on Euronext Amsterdam • Traded on NYSE since 1991 and since 1969 and quoted in euros quoted in US dollars • One Aegon NYRS equals one Aegon Amsterdam-listed common share • Cost effective way to hold international
Slide 32: Disclaimer
Disclaimer Cautionary note regarding non-EU-IFRS measures • The effect of the European Union’s Solvency II requirements and other regulations in other jurisdictions affecting the capital Aegon This document includes the following non-EU-IFRS financial measures: operating result, income tax, result b