Aegon(AEG) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics - Operating capital generation for Q3 2024 was $336 million, driven by US businesses, with year-to-date generation exceeding EUR 900 million [5] - Full-year operating capital generation guidance increased to EUR 1.2 billion from the previous EUR 1.1 billion [5] - Cash capital at holding decreased to EUR 1.5 billion due to EUR 650 million returned to shareholders via dividends and share buybacks [7] - New share buyback program of EUR 150 million announced, expected to begin in January 2025 [7] - US RBC ratio decreased by 11 percentage points to 435$373 million, primarily due to discontinuance of low-margin record-keeping plans [10] - UK Workplace platform recorded net deposits of GBP 865 million, while the Advisor Platform saw net outflows of GBP 960 million [11] - International new life sales decreased by 17% to EUR 65 million, with cyclical headwinds in Brazil and Spain [13] - Global Asset Management recorded third-party net deposits of EUR 2.8 billion, with assets under management increasing to EUR 324 billion [15] Market Performance - US business saw a 19% increase in licensed agents for World Financial Group, reaching over 82,000 agents [9] - UK platform assets under administration increased to GBP 112 billion, driven by favorable markets and net deposits [12] - China saw temporary higher sales ahead of regulatory pricing changes at the end of Q3 2024 [13] Strategy and Industry Competition - Company continues to execute its strategy to reduce exposure to financial assets in the US, with a target to reduce capital employed to $2.2 billion by 2027 [24] - Transformation of Transamerica remains on track, with a focus on increasing agent productivity and diversifying revenue streams [9] - Company plans to manage cash capital at holding down to the midpoint of the operating range (EUR 0.5 billion to EUR 1.5 billion) by the end of 2026 [8] Management Commentary on Operating Environment and Future Outlook - Management highlighted commercial volatility in Q3 but remains confident in achieving 2025 targets [30] - Company expects to achieve operating capital generation of EUR 1.2 billion in 2025 and free cash flow of EUR 800 million [28] - Management plans to provide an update on strategy and targets at the Capital Markets Day on December 10, 2025 [31] Other Important Information - Company completed the purchase of 41$2.9 billion face value of institutionally owned universal life policies, achieving targeted investment hurdles [26] - Regulatory approvals for actuarially justified premium rate increases in long-term care now amount to $457 million, representing 55% of the target [25] Q&A Session Summary Question: Impact of US macro environment on capital reduction plans - Company’s capital reduction plans are mostly unilateral and bilateral, with limited reliance on third-party actions, making them largely within the company’s control [33][34] Question: Mortality experience variance and IFRS impact - Limited IFRS variances observed in Q3, with no significant impact from mortality experience [37] Question: Criteria for capital returns versus value creation - Company prioritizes investments that accelerate strategic progress and meet financial and non-financial criteria, with disciplined capital deployment [39][40] Question: US government strategies and WFG regulation - Company is well-positioned for potential regulatory changes, including the fiduciary rule, with a focus on best interest regulation [42][43] Question: Buyback program and capital reduction timeline - Company plans to reduce cash capital to EUR 1 billion by end of 2026, with EUR 150 million buyback program including EUR 40 million for share-based compensation [49][50] Question: OCG and free cash flow outlook for 2025 - Company maintains OCG guidance of EUR 1.2 billion for 2025, with new business strain expected to offset benefits from equity markets and reinvestment rates [56][78] Question: WFG agent productivity and activation program - WFG agent productivity is supported by a granular activation program, with newer agents receiving training and support to accelerate productivity [61] Question: US retirement plans competitiveness - Company is focused on improving retention and profitability in the retirement plans business, with strong written sales and a robust pipeline [82][83] Question: Inorganic growth and ASR stake - Company remains open to inorganic opportunities that align with its strategy, while maintaining a patient approach to its ASR stake [89][90]