Financial Data and Key Metrics Changes - Aegon reported operating capital generation of €292 million for Q1 2023, a 5% increase compared to Q1 2022, driven by business growth and improved claims experience [14][17] - Free cash flow for the quarter was €47 million, primarily reflecting remittances from Aegon's asset management joint venture in China [14] - The Group Solvency II ratio increased by two percentage points to 210%, supported by capital generation and diversification benefits [15] Business Line Data and Key Metrics Changes - New life sales in the Individual Solutions business increased by 21% year-over-year, largely due to higher indexed universal life sales [7] - U.S. Workplace Solutions saw written sales of USD 2.6 billion, doubling the amount from the same quarter last year, driven by a significant contract win [8][9] - The U.K. Workplace channel experienced a 5% increase in net deposits, while the retail channel faced net outflows of £413 million due to adverse market conditions [9][10] Market Data and Key Metrics Changes - Aegon’s asset management faced third-party net outflows of €1.3 billion, primarily from its Chinese asset management joint venture, reflecting subdued investor sentiment [11] - Growth Markets reported a 27% increase in new life sales, particularly in China following the easing of COVID-19 restrictions [11] Company Strategy and Development Direction - Aegon is focused on optimizing its portfolio, having sold its U.K. protection business and divested several non-core activities in Asia [5][12] - The company aims to regain a top five position in selected life insurance products and is investing in alternative asset management capabilities [7][12] - Aegon is progressing with the a.s.r. transaction, expecting to close in the second half of 2023, which will further streamline its operations [5][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering on strategic commitments and 2023 financial guidance despite ongoing global market volatility [6][25] - The company anticipates that the U.S. mortality experience will improve, with expectations of better results in the latter part of the year [35] Other Important Information - Aegon has maintained a strong balance sheet, with cash capital at the holding level decreasing to €1.4 billion, within the target range [14][18] - The company is actively managing its financial assets, achieving 97% hedge effectiveness on variable annuity guarantees [19] Q&A Session Summary Question: Update on the Aegon Netherlands closing timeline - Management confirmed they are on track for a July closing, pending regulatory approvals, and discussed the implications for holding company costs post-transaction [29][30] Question: Characteristics of new business strain and profitability - New business strain in the U.S. was €168 million for Q1 2023, aligned with increased sales, and the company targets internal rates of return above 10% [34] Question: Dividend upstreaming and free cash flow guidance - Management reiterated guidance of around €600 million in free cash flow for 2023, with confidence in meeting this target [66][69] Question: Dutch Solvency II ratio and market movements - The Dutch Solvency II ratio decreased to 191% due to model updates and market movements, but management noted improvements in the second quarter [70] Question: Commercial mortgage loan book performance - Management expressed confidence in the commercial mortgage loan book, reporting no delinquencies and a low loan-to-value ratio [52]
Aegon(AEG) - 2023 Q1 - Earnings Call Transcript