管理層發言
Good day, and thank you for standing by. Welcome to the Aegon's First Half 2025 Results Conference Call. Please note that today's conference is being recorded. I would now like to hand the conference over to your speaker, Yves Cormier, Head of Investor Relations. Please go ahead.
Thanks, operator, and good morning, everyone. Thank you for joining us for this conference call on Aegon's first half year 2025 results. I'm Yves Cormier, Head of Investor Relations, and joining me today to take you through our progress are Aegon CEO, Lard Friese; and CFO, Duncan Russell. Before we start, we would like to ask you to review our disclaimer on forward-looking statements, which you can find at the end of the presentation. And with that, I would like to give the floor to Lard.
Thank you, Yves, and good morning, everyone. I want to start today's presentation by informing you about the next steps in Aegon's transformation and running through our commercial developments before Duncan will address our results in more detail. So let me begin on Slide #2 with the key messages. Our strategy is to grow and transform our businesses, and we made good progress in doing so during the first half of 2025. We are on track to deliver on our strategy and on all our targets. Our operating result was EUR 845 million, up 19% compared with last year. This increase was mainly driven by profitable business growth and less unfavorable claims experience in the U.S., but also in the U.K. and in our International segment. Operating capital generation before holding and funding expenses amounted to EUR 576 million, decreasing by 2% over the same period. New business strain increased, especially in our U.S. strategic assets as we grew the business. Commercial momentum remains strong across our key markets leading to higher new life sales and more net deposits. The capital position of our operating units remains strong and above their respective operating levels. Furthermore, in the U.S., we have extended the hedging of the variable annuity portfolio to cover part of the base fee exposure, which reduces our exposure to downward equity markets further. Cash capital holding totals over EUR 2 billion following the receipt of planned remittances from all our units and the completion of a EUR 150 million share buyback in the first half of the year. On the back of the solid performance, we have increased the interim dividend by EUR 0.03 compared with last year to EUR 0.19 per common share. Furthermore, today, we announced a EUR 200 million increase to the current share buyback program, which began in July. In total, we will buy back EUR 400 million of shares during the second half of 2025. This once again demonstrates our ongoing commitment to return excess capital to shareholders unless we can invest it in value-creating opportunities, and it is consistent with our plan to reduce our cash capital at holding to around EUR 1 billion by the end of 2026. Today, we are also announcing a review of potential relocation of our head office to the U.S. I will now move to Slide #3 to provide you with some background on this review. This is an important step in the transformation of our company. In recent years, Aegon's business in the United States, which accounts for approximately 70% of Aegon's operations, has become Aegon's primary market and central to the company's strategy and long-term growth. The relocation of Aegon's legal domicile and head office to the United States is a logical step, is expected to simplify Aegon's corporate structure as it would align its legal domicile, tax residency, accounting standard and regulatory framework with a geography where it conducts the majority of its business. Moreover, bringing the head office closer to our largest market allows for much closer cooperation between the holding and its main business unit, which is an important enabler to grow successfully in the long term. As part of the review, we will evaluate the additional advantages that would come with being a U.S.-based company. This includes the impact on all of Aegon's stakeholders and of making our listing on the New York Stock Exchange our primary listing alongside our Euronext listing. Another key component of this review is the implementation of U.S. GAAP reporting, which is a complex process that would likely take 2 to 3 years to complete. Preparations for the implementation have begun. We aim to share the outcome of this review at our Capital Markets Day on December 10 of this year. With that, I will now move on to Slide #4 to discuss our recent commercial performance, starting with the Americas. We continued to deliver on Transamerica's transformation, growing our strategic assets during the reporting period. World Financial Group recorded a 14% increase in its number of licensed agents to over 90,000, thanks to successful recruiting efforts and improved retention. The productivity of the agents selling life insurance products increased mainly from higher average premiums per policy. This offset a slight reduction in the number of multi-ticket agents, while it led to an increase in Transamerica's market share in WFG U.S. life sales. This higher agent productivity at WFG was one of the key drivers of the 13% increase in new life sales in our Individual Life business. We also recorded strong growth of new life sales in the brokerage channel, driven by the successful launch of a fully digital experience of a whole life final expense product last autumn. Furthermore, we continue to see steady growth in the RILA product, where net deposits nearly doubled compared with last year. In the savings and investments segment, we recorded solid net deposits in our retirement plan business over the reporting period. This was driven by midsized plans, partly supported by the onboarding of a large pooled plan. Written sales continue to be strong, which we see as a positive indicator for future growth of our book. Finally, we realized further growth in the general accounts stable value product and in IRAs as we work to increase profitability and diversify revenue streams in the retirement plan business. Let's move on to Slide #5 for an update on the other units. At Aegon U.K., we continue to make progress on the strategy we presented at the Teach-In in June of last year. Deposits in the Workplace platform can be lumpy. In this period, we benefited from the onboarding of a larger scheme. The Adviser platform business continued to be adversely impacted by ongoing consolidation and vertical integration in nontarget Adviser segments. In the International segment, our joint ventures in Brazil, China as well as Spain and Portugal, all generated higher new life sales. This was partially offset by lower sales at TLB as a result of changes in the competitive landscape in Singapore. Aegon's Asset Management reported solid third-party net deposits during the reporting period. Net deposits in the Global Platforms business were mostly attributed to alternative fixed income products. Strategic partnerships net deposits were driven by our Chinese joint venture, which benefited from a collaboration with the consumer finance platform. I will now hand over to Duncan to discuss our financial performance in more detail.
Thank you, Lard. Let me start with an overview on Slide 7. In the first half of 2025, the operating results increased by 19% year-on-year, mostly reflecting an improvement at Transamerica. Operating capital generation before holding, funding and operating expenses decreased by 2% over the same period, mainly driven by higher new business strain. Free cash flow in the first half of 2025 amounted to EUR 442 million, and this is a significant increase compared to the EUR 373 million generated last year. Cash capital at holding remains very healthy, standing at EUR 2 billion at the end of June, allowing us to announce an increase of our ongoing share buyback program. On a per share basis, valuation equity, which consists of the sum of shareholders' equity and the CSM balance after tax decreased by 5% in the period, mostly from the impact of unfavorable exchange rate movements on the group CSM, which were partly offset by a strong net result. Exchange rate movements were also the driver for the reduction of gross financial leverage. Lastly, the group solvency ratio decreased by 5 percentage points compared with year-end 2024 to 183%, mainly from the new share buyback program and the reservation of the 2025 interim dividend. Using Slide 8, I will address the development of our IFRS net results in the first half of 2025. The operating results amounted to EUR 845 million, coming in at the top end of the EUR 750 million to EUR 850 million run rate range we had indicated with the full year 2024 results. In the U.S., the operating results improved materially year-on-year to EUR 685 million within our guided range of EUR 650 million to EUR 750 million. The result benefited from growth in our strategic assets, notably the Protection Solutions business, with some offset in distribution where the operating margin fell in the first half of 2025 as previously flagged, as we invested further in the business. We had an improved result in financial assets because of less unfavorable experience variances from onerous contracts. Claims experience was largely offset by reserve releases. Unfavorable reserve changes due to premium variances that we saw in the U.S. in the second half of 2024 continued into the first half of 2025. As we previously flagged, but to a materially lesser degree. The operating results of the U.K. increased, benefiting from business growth and favorable markets. In the International segment, the operating results increased mainly from a higher CSM release in TLB and Spain and Portugal. Aegon Asset Management's operating results, as well as out of the holding, were broadly stable compared with the same period of last year. Moving on. Nonoperating items were an aggregate favorability in the period, driven by hedging results recorded in fair value items. Other charges amounted to EUR 207 million, mostly because of the assumption updates in the U.S. and at TLB to address the experience we've recently seen. Finally, we booked a EUR 50 million contribution from our stake in ASR. Looking forward to the second half of the year, we are increasing our guided operating results range for the U.S. by EUR 50 million to EUR 700 million to EUR 800 million, but we're keeping the group guidance of EUR 750 million to EUR 850 million, reflecting the current exchange rates. I'm now moving on to Slide 9. Based on the strong net result and a positive contribution of the assumption updates to OCI, shareholders' equity increased slightly over the period. The CSM balance decreased over the period, mostly because of unfavorable currency movements. In U.S. dollars, the CSM of our strategic assets in the U.S. increased thanks to profitable new business, while the CSM of our financial assets decreased due to the runoff of the book, the impact of claims experience, as well as the impact of strengthening policyholder behavior assumptions. Outside the U.S., the changes to the total CSM balance were limited, with the U.K. CSM decreasing modestly on a local currency basis and the International segment, CSM increasing modestly from assumption updates. Overall, valuation equity per share decreased by 5 percentage points over the first half of 2025 to EUR 8.47 per share, mostly due to the exchange rate development. Slide 10. Operating capital generation or OCG decreased by 2% compared to the first half of 2024. OCG from the U.S. decreased by 4% or 3% in U.S. dollars. OCG from the strategic assets decreased; our investments in business growth drove higher new business strain. OCG from financial assets increased mostly from higher fees as variable annuity account balances increased on the back of favorable markets. Furthermore, claims experience in the period was less unfavorable than in the same period last year and included EUR 86 million of unfavorable mortality, largely related to the Universal Life book. Looking through the unfavorable claims experience in the period, we continue to observe a quarterly OCG run rate for the Americas of around EUR 200 million to EUR 240 million. The OCG benefited from favorable markets as well as favorable nonrecurring variances. The International segment reported lower OCG, with improved underwriting experience in TLB being offset by lower OCG from China. Aegon Asset Management's OCG was stable compared to the same period of last year. Looking ahead, we continue to expect OCG before holding, funding and operating expenses of around EUR 1.2 billion in 2025. I'm now turning to Slide 11. The capital positions of our business units remain robust and above their respective operating levels. The U.S. RBC ratio decreased by 23 percentage points compared with year-end 2024 to 420%. Market movements had a 15 percentage points negative impact on this ratio. Of this, 5 percentage points was due to hedging, rebalancing and cross effects as a consequence of elevated market volatility in April; which we flagged with the first quarter trading update. The remaining unfavorable impact was largely driven by valuation moves in our alternative asset portfolio and lower interest rates. Onetime items had a 9 percentage points unfavorable impact due to restructuring costs, the annual actuarial assumption update, and several smaller items. For the remainder, operating capital generation in the period was offset by remittances to the group. Finally, in mid-August, we decided to expand the dynamic hedge program of our variable annuities to cover the equity market exposure of the fees of 25% of the base contracts. This represents an additional lever available to us to manage our risk profile going forward, reduces our economic equity market exposure on the VA block, and thus capital requirement, and first solidifies the expected runoff profile, albeit with a small negative impact on run rate OCG. In the U.K., the solvency ratio of Scottish Equitable decreased by 1 percentage point to 185% as operating capital generation in the period was offset by remittances and investments in the business. Slide 12. Cash capital at holding remains extremely healthy, standing at just over EUR 2 billion. Free cash flow amounted to EUR 442 million in the period and included remittances from all our units as well as capital returns from our stake in ASR. We returned EUR 110 million of capital to shareholders through share buybacks. In addition, we purchased EUR 14 million worth of shares, which will be used for share-based compensation plans. Today, we have announced a EUR 200 million increase for the currently ongoing share buyback program, bringing it to a total of holding around EUR 1 billion by the end of 2026.
Let me conclude our presentation with the final slide on Page 13. Taking into account our performance in the first half of 2025 and the outlook for our businesses, we are on track to achieve all of our financial targets for 2025. We look forward to meeting you at the Capital Markets Day on December 10 in London. At the event, we will share the conclusion of the review regarding a potential relocation of Aegon's head office to the United States. And with that, I would now like to open the call for questions. Please limit yourself to 2 questions per person. Operator, please open the Q&A session.
分析師問答
And your first question today comes from the line of David Barma, Bank of America.
To start with, can you discuss what led to the decision to cover 25% of the variable annuity based fee? Did you view that as the best balance regarding the cost of protection, or is this just a first step with the intention of doing more in the future? I'll ask my second question now since it's related. The measures taken regarding the Universal Life block will impact OCG going forward, but you've reaffirmed your guidance. We've faced similar situations in the past two years with mortality issues first and then the challenges in China, both of which were offset by other actions. So, I'm trying to understand how dependent OCG is on the current equity levels and how much stronger-than-anticipated business growth is influencing your confidence in the OCG level you're guiding for. Could you provide some insight on that?
Thank you, David. Yes, we recently implemented VA-based fee hedging. This gives us an additional tool to manage and stabilize the capital generation and earnings profile of our legacy variable annuity book, which is in runoff. We executed this for several reasons, including capital stabilization and the favorable state of equity markets. It's part of our ongoing management activities related to financial assets. The 25% figure reflects a cautious approach, allowing us to monitor its effectiveness and adjust as necessary in the future. We need to consider how these actions impact our capital position, which we are continuously monitoring. Overall, this has decreased our economic exposure in the variable annuity book, which is a positive outcome. Regarding OCG, the quarter was straightforward, and we have reaffirmed our guidance. Taking into account the reported OCG for the half year and adding our quarterly run rate, we remain on track for our goal of around EUR 1.2 billion for the year. As for our equity sensitivity, we are not highly impacted by equity fluctuations. The sensitivities in our balance sheet are relatively small, and our OCG is roughly sensitive to plus or minus 10% with an impact of around EUR 40 million, so we are not particularly equity sensitive.
Your next question comes from the line of Michael Huttner from Berenberg.
I wanted to mention that it sounds like a farewell with the decision you've made, and since you’ve already begun implementing U.S. GAAP, it seems to me like a definitive choice. My first question is about U.S. GAAP; can you give an idea of where it might land in relation to the operating profit or the OCG we currently have? Also, I have two more questions; regarding the pooled plan, how substantial is it? I believe it might be around EUR 2 billion, but I'm not certain. Additionally, could you provide figures on the new business strain? Specifically, in terms of economic exposure, how much does the VA benefit lower the required capital?
Okay. Michael, that's a number of questions. Let me confirm, it's EUR 1.9 billion the pooled plan that you're referring to as part of the retirement growth of net deposits in this half year. For the remainder, I hand over to you, Duncan.
Yes. So Michael, on U.S. GAAP, no, it's too early to tell. And I don't want to give any sort of guidance on that, that would be misleading at this stage, to be honest. Then on the capital requirement from the VA, it's a small capital benefit. We are reducing the equity exposure, which will reduce the required capital by a small amount in the third quarter.
And the new business strain?
I'm not entirely sure what your question was on new business strain. But if I look in the quarter, our new business strain was more or less as we anticipated, it was roughly EUR 6 million higher than our guided run rate in aggregate.
And the next question comes from the line of Farooq Hanif from JPMorgan.
I want to understand your thoughts on the redomiciliation since you've previously mentioned considering it, especially during your move to Bermuda as your regulatory domicile. I understand why it would make sense, given that most of your business operates in the U.S. However, I’d like to know what has changed, considering you’ve likely examined this before. Specifically, how do regulators play into this decision? Would the ability to implement some of your U.S. plans be easier as a result, perhaps by using U.S. GAAP and being based there? I would appreciate any additional insights you can provide on this, even if you are still reviewing it. Lastly, I'd like to ask about your EUR 845 million operating profit. Can you clarify how solid that figure is? You briefly mentioned some points earlier, but how confident are you in its cleanliness?
Yes. Farooq, I will address your first question and go through the rationale and everything you asked for. Let's also start clarifying the questions that Duncan had regarding the financials.
Yes, Farooq, it's pretty clean. We are pleased with the first half IFRS operating profit, which we reported at EUR 845 million. If we consider the negative variances, which amount to roughly EUR 92 million for the group, our adjusted figure comes to about EUR 937 million, which is strong. However, as we indicated for the full year, we have a recurring VA interest accretion of around EUR 30 million to EUR 35 million that we need to deduct. So the underlying figure is about EUR 900 million for the first half. Since then, currency fluctuations have affected us, bringing us back to around the EUR 850 million level, which aligns with our guidance. Overall, it's been a solid quarter and a good half-year, Farooq, to be honest.
So Farooq, regarding your question about the potential move to the U.S., there are a few points to discuss. The Aegon transformation has been significant, and we've made considerable progress over the past few years. We are now poised for the next step in that transformation. When we announced the merger of our Dutch operations with ASR and completed that transaction at the beginning of July 2023, it was a pivotal moment. At that time, we were implementing IFRS 17 and had just disclosed it for the first time. It's important to note that U.S. GAAP was not available at that point. We're also in the midst of completing a comprehensive transaction with ASR, which required us to ensure proper operational integration afterwards. Additionally, because DNB could no longer serve as our group regulator, we relocated our legal seat to Bermuda and established the BMA as our regulator, which we also needed to incorporate properly. In that same timeframe, we held a Capital Markets Day in London in June, just weeks before the ASR transaction, to launch Transamerica's strategy and plans. With two years of execution behind us, we’re now seeing strong progress. The U.S. business now represents 70% of our overall group footprint. Given that the U.S. is such a significant part of our business located in one of the largest and most vibrant markets in the world, it makes sense for it to lead Aegon Group's future direction. As we look to grow our U.S. operations, moving our holding company to that market is a logical step. We are ready to proceed with that change and have done extensive work to prepare. However, we need to discuss the implications of this move with various stakeholders, especially our employees and works councils. We'll complete this review before the Capital Markets Day and share our findings with you.
I'm sorry to interrupt, but has there been any regulatory pressure to do this?
No.
Your next question comes from the line of Iain Pearce from Exane BNP Paribas.
Could you discuss the main challenges of potentially redomiciling? You've mentioned U.S. GAAP, but what other difficulties do you anticipate? Have you talked to your major shareholder about this move? That article of association may create complications for them regarding redomiciliation. Additionally, what are your thoughts on the asset allocation opportunities when moving to a U.S. regulated entity? Do you view this as a key advantage, and is there a plan to increase risk in the asset portfolio and boost private asset allocations as part of this transition?
Thank you very much, Iain. I'll address the first couple of questions. Regarding your last inquiry, I will pass it over to Duncan. To clarify our relationship with Aegon, we cannot represent them, but they are informed, and we will continue to communicate with them in the future. Concerning the primary challenges we are facing, we need to improve head office processes in the U.S. This is essential, and we must ensure we execute this well. U.S. GAAP is a significant factor; we have initiated the project, but implementing the new accounting standard will take time. It is crucial that we get this right. In the interim, we must manage this transition process effectively, which I consider to be the main points to highlight. Now, regarding the potential asset allocation opportunities, Duncan?
Yes. I think no impact on the redomiciliation on our allocation choices or opportunity. We manage our entities on a local capital basis. So we're already operating under the U.S. statutory regime for Transamerica, and we have asset allocation appropriate to our liabilities in that market, and I see no impact from the redomiciliation.
And the next question comes from the line of Nasib Ahmed, UBS.
So first one on just M&A. You've still got the financial assets. There's been a big variable annuity deal where I think the counterparty managed to get over the line on the counterparty risk, and that was one of the blockers for you guys, I think. So any thoughts on kind of third-party actions on the EUR 3.3 billion locked in? And then on the flip side anything that you would potentially buy? And how does the U.S. redomiciliation help with M&A on the acquisition side? Second one is on OCG versus IFRS in the U.S. So Duncan, you raised the guide on the IFRS by EUR 50 million, but I think the OCG guide stays the same. What's the difference? Why haven't you raised the OCG guide in the U.S.?
Yes. So I'll take the M&A side, and then you can do financial asset, Duncan, on the piece about the OCG. So on acquisitions, the same as we mentioned before, it's very much linked to our strategy. We want to grow like any company wants to grow. If we see an opportunity that makes sense and strengthens our business, and it makes sense both for financial criteria and nonfinancial criteria, then we will certainly look at it. We will be disciplined. We're not going to do any M&A unless we believe that we can integrate it and create value for our stockholders. The U.S. is a large market; it is our largest market. So being there physically with your head office, of course, and being closer to that market on a daily basis, obviously, would be positioning yourself more beneficial for that. But our M&A approach has not changed from what we've mentioned before. Duncan?
Two separate questions. On the financial assets, we continue to look at our unilateral, bilateral and third-party options on those books of businesses. We've been doing that for years. Should the transaction present itself, which we find attractive for our shareholders, if they make sense, we'll do it. If not, we won't, and we'll focus on unilateral or bilateral options. No real change there. We just continue to look at all our options as we have been doing for the last couple of years. On the guidance, 2 things. The guidance reflects what we actually see in our actuals on a clean basis in the half year. We've seen that the U.S. operating profit performed well in the first half under IFRS, and that reflects, therefore, in the raised guidance, which means we expect that run rate to continue. On OCG, where we performed more in line with our previous guidance, hence, that's driven the unchanged outlook there. Bear in mind, there are quite material differences in the way, for example, growth is treated under the two regimes. Under U.S. regulatory regime as you grow into a new business strain, which is pressing in the near term. Under IFRS, you create CSM, which comes through in earnings relatively quickly. So that is also an explanation, if you really didn't catch it.
Your next question comes from the line of Farquhar Murray from Autonomous.
A couple of questions from my side, just mainly on the domiciling discussion. Obviously, it's been debated for a few years and does not seem a bit of a foregone conclusion, but I just wondered if you have a sense, therefore, on the actual project costs of the U.S. GAAP implementation. And then obviously getting closer to the U.S. business makes a lot of sense, but I just wondered where that leaves your approach on the rest of the global footprint.
Yes. So first of all, the costs are going to be part of the review, and we'll update you on the outcome of the review at the Capital Markets Day. When it comes to the total footprint, well, as you know, we've set ourselves a perimeter in 2020 when I joined the company. We're now in that perimeter, and we have a strategy to improve and create advantage business in that perimeter. That is unchanged.
Your next question comes from the line of Benoit Petrarque from Kepler Cheuvreux.
So yes, the first one is actually on your ASR stake. What are your initial thoughts around your stake also going forward, looking at the potential relocation in the U.S.? It sounds like it becomes less core than before. And then maybe on ahead of the potential relocation, do you plan to initiate deleveraging actions and yielding holding levels. So any plans to maybe refocus more on deleveraging next year?
Duncan, can you take those questions?
Yes, nothing changes on either of those fronts. Today, we announced a review, and we'll conclude on that review with the Capital Markets Day. If we decide to proceed it will take 2 to 3 years. The leverage, no need to change our leverage given our footprint is what it is today. On ASR, we've been consistent that we're a long-term, patient holder. There are two potential reasons we would dispose of that, either we have an alternative lease for that or we feel that the price reflects the intrinsic value. No change on either based on the announcement today.
Your next question comes from the line of Jason Kalamboussis from ING. Jason, it looks like we've lost your connection. Can you hear us?
My suggestion, operator, is you move to the next question, and then if Jason comes back, we'll take his question, obviously.
I will now go to the next question. And your next question is a follow-up from Michael Huttner from Berenberg.
On U.S. mortality Slide 17, can you talk a little bit about the unfavorable claims experience? I remember a figure, I think it was EUR 66 million in Q1. So normally, you would have EUR 33 million because of normal seasonality, and there was EUR 33 million on top. I just want to get a feel for which way it's going versus your assumptions? And the second question is, I mean, sorry, Lard, I didn't hear the answer on pooled. I did the numbers. So on the savings and investment Q2 2025, you had a EUR 2 billion net inflow. It was 0 in Q2 2024, and you mentioned pooled plan. And I'm really sorry, I didn't hear the number on that.
EUR 1.9 billion. The pooled plan, you guessed it was EUR 2 billion. You're pretty close. For your other question, I will hand it over.
Michael, we had the overall mortality in the U.S. in the second quarter that was slightly positive. I would say more or less in line with our best estimate expectation; slightly positive. Since the mortality update we did last year, we had positive 3Q, 4Q, negative 1Q, positive 2Q this year, and we remain comfortable with our overall mortality assumptions.
We have no further questions at this time. I would now like to hand the call back over to Yves Cormier for closing remarks.
Thank you very much, Jerry, before I hand over to Yves. We will make sure we reach out to Jason Kalamboussis for his question.
All right. Well, thank you, operator. This concludes today's Q&A session. Should you have any remaining questions, please get in touch with us at the Investor Relations team. On behalf of Lard and Duncan, I would like to thank you for your attention. Thanks again, and have a good day.
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.