Aegon Ltd. · EURONEXT:AGN
Aegon — Q3 2022 Earnings Presentation
29 slides from Aegon's earnings presentation, Nov 10, 2022
Slide 1: 3Q 2022 Results
3Q 2022 Results Lard Friese Chief Executive Officer Duncan Russell Chief Transformation Officer Matt Rider Chief Financial Officer November 10, 2022 Helping people live their best lives
Slide 2: Maintaining high pace in Aegon's transformation
Maintaining high pace in Aegon’s transformation 1 Making good progress with expense savings and growth initiatives 2 Freeing up excess capital by reinsuring closed block from TLB to Transamerica 3 Dampening the equity sensitivity in Variable Annuities 4 Transaction with a.s.r. provides unique benefi
Slide 3: Transaction with a.s.r. provides unique benefits and accelerates strategy
Transaction with a.s.r. provides unique benefits and accelerates strategy Clear strategic • Creating a leader in the Dutch pension, life and non-life insurance markets focus, building • Aegon to receive 29.99% strategic stake in a.s.r.1 and EUR 2.2 billion in on our gross cash proceeds strengths • S
Slide 4: Executing on Aegon's granular operating plan
Executing on Aegon’s granular operating plan Operational improvement plan (3Q 2022) Expense Growth in initiatives initiatives progress • Continued implementation of the Number of operational improvement plan 898 260 130 1,288 initiatives executed • Expense savings remained on track, the expense savi
Slide 5: Continuing commercial momentum in the US
Continuing commercial momentum in the US US Strategic Asset: Individual Solutions US Strategic Asset: 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 asse
Slide 6: Building on strengths in NL; UK platform sales impacted by market volatility
Building on strengths in NL; UK platform sales impacted by market volatility NL Strategic Assets UK Strategic Asset 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 m
Slide 7: Challenging environment for Asset Management; growing steadily in Growth Markets
Challenging environment for Asset Management; growing steadily 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) life busi
Slide 8: Update on TLB & US Variable Annuities
Update on TLB & US Variable Annuities Duncan Russell Chief Transformation Officer 8
Slide 9: Freeing up excess capital by reinsuring closed block from TLB to Transamerica
Freeing up excess capital by reinsuring closed block from TLB to Transamerica Updated strategy for TLB Estimated impact on the US RBC ratio • Decided to retain TLB to maximize value through an internal reinsurance transaction after exploring all options • TLB to be managed as a Financial Asset going
Slide 10: Focusing on active management of variable annuity portfolio in near-term
Focusing on active management of variable annuity portfolio in near-term Key learnings from engagement with third parties • Third parties use similar actuarial assumptions and manage financial risks in a similar manner to Transamerica • Interest from counterparties in variable annuity block, more so
Slide 11: 3Q 2022 Financial Results
3Q 2022 Financial Results Matt Rider Chief Financial Officer 11
Slide 12: Financial results
Financial results Addressable expense savings1 EUR 250 million EUR 300 million 2Q 2022 3Q 2022 Operating result EUR 443 million EUR 429 million 3Q 2021 3Q 2022 Operating capital generation2 EUR 390 million EUR 399 million 3Q 2021 3Q 2022 Free cash flow EUR 62 million EUR 67 million 3Q 2021 3Q 2022 C
Slide 13: Operating result of EUR 429 million reflects lower fees, partly offset by expense savings
Operating result of EUR 429 million reflects lower fees, partly offset by expense savings and better claims experience Operating result (3Q 2022, in EUR million) Change vs. 3Q 2021 Market movements Americas 156 -4% • Lower fee revenues, in particular in US Variable Annuities and Asset Management The
Slide 14: Net loss of EUR 206 million driven by non-economic fair value items
Net loss of EUR 206 million driven by non-economic fair value items Net result (3Q 2022, in EUR million) Operating result 429 Fair value items (506) Non-operating items • Fair value loss mainly driven by US interest rate hedges Losses on investments (127) • Hedges maintained high effectiveness on an
Slide 15: Capital positions of main units remaining above operating levels
Capital positions of main units remaining above operating levels Solvency II / RBC ratio 3Q 2022 • Unfavorable impact from market movements, mainly lower equity markets • Reflects -10%-points impact from dividends to US intermediate holding US1 404% -12%-pts vs. 2Q22 company to prefund majority of t
Slide 16: Capital return to shareholders reduced Cash Capital at Holding
Capital return to shareholders reduced Cash Capital at Holding Cash Capital at Holding (in EUR million) 67 11 • EUR 373 million cash outflows from 1,680 capital return to shareholders from 1,500 dividends and the second tranche of the 1,368 share buyback program (391) Operating • Third and final tra
Slide 17: Creating value from Aegon's Financial Assets
Creating value from Aegon’s Financial Assets Financial Assets highlights 3Q 2022 Hedge effectiveness • Setting up a voluntary reserve to reduce the capital sensitivity to equity US Variable markets and further increase the predictability of capital generation Annuities 97% • In the near-term, Aegon
Slide 18: Concluding remarks
Concluding remarks Lard Friese Chief Executive Officer 18
Slide 19: Key messages
1 Making good progress with expense savings and operational improvement plan 2 Freeing up excess capital by reinsuring closed block from TLB to Transamerica Key 3 Dampening the equity sensitivity in Variable Annuities messages 4 Transaction with a.s.r. provides unique benefits and accelerates strate
Slide 20: 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 21: Group Solvency II ratio amounts to 212%
Group Solvency II ratio amounts to 212% Own funds (OF) and Solvency Capital Requirement (SCR) development (in EUR million) SII 214% +5% 0% -3% +2% -6% 212% • Solvency II ratio reduced driven by market movements and other 0 movements, including tiering (240) (11) restrictions and a reduction of 423 1
Slide 22: Key capital sensitivities
Key capital sensitivities Solvency II and RBC sensitivities1 (in percentage points, 3Q 2022) Scenario Group NL Life UK US4 US RBC Equity markets +25% +1% -2% -8% +8% +13% Equity markets -25% -5% -2% +11% -16% -23% Interest rates +50 bps -1% -1% -2% 0% 0% Interest rates -50 bps +1% +1% 0% 0% +1% Gove
Slide 23: 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 1 (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 24: 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 25: 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 5.8 2.3 1.8 1.7 24.7% 22.9% 1.2 1.3 1.3 Hybrid 5.0 4.7 4.9 4.9 4.7 4.6 4.6
Slide 26: 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 27: Aegon Investor Relations
Aegon Investor Relations Stay in touch Upcoming events Contact Investor Relations Aegon IFRS 9/17 Jan Willem Weidema +31 70 344 8028 December 14, 2022 Head of Investor Relations Educational Webinar Karl-Otto Grosse-Holz +31 70 344 7857 Aegon 4Q 2022 results February 9, 2023 Investor Relations Office
Slide 28: 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 29: 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