Aegon(AEG)2025-02-20 16:30Financial Data and Key Metrics Changes - Aegon reported an operating result of nearly €1.5 billion for 2024, consistent with last year's results, with improved claims experience following assumption updates [5] - Free cash flow for 2024 was €759 million, meeting guidance, and a final dividend of €0.19 per common share was proposed, bringing the full-year dividend to €0.35 per share, a 17% increase from 2023 [6][59] - The group's operating results increased to €776 million, driven by U.S. Strategic Assets and Aegon Asset Management, with a 14% increase in IFRS operating results compared to the prior year [28][30] Business Line Data and Key Metrics Changes - In the U.S., annuity sales through the WFG network increased by 22% compared to 2023, while new life sales decreased by 3% [12][15] - The U.K. saw net deposits in the Workplace platform amounting to £3.7 billion, more than double the level of 2023, while the Adviser platform experienced net outflows of £3.5 billion [17] - Aegon Asset Management reported strong results with third-party net deposits of €9.2 billion, driven by inflows in alternative fixed income funds [21] Market Data and Key Metrics Changes - New life sales in the International segment decreased by 15% compared to 2023, primarily due to pricing actions in China reflecting lower interest rates [19] - In Brazil, gross written premiums increased by more than 15%, indicating strong customer retention despite a slight decrease in new life sales [97] - The U.K. market showed a favorable increase in assets under administration, which amounted to £115 billion, up 11% compared to the end of 2023 [18] Company Strategy and Development Direction - Aegon is focused on transforming Transamerica into a leading middle-market life insurance and retirement company in the U.S. and is executing a strategy to reverse outflows in the Adviser platform [7][10] - The company aims to reduce exposure to Financial Assets while growing Strategic Assets, with a target of €1.2 billion in operating capital generation for 2025 [62] - Aegon is committed to generating attractive returns for shareholders, evidenced by a €150 million share buyback program [6][59] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting 2025 targets, highlighting solid growth in Strategic Assets and a commitment to expense discipline [62] - The company acknowledged challenges in the International segment, particularly in China, due to low interest rates impacting life insurance sales [90][101] - Management noted that while 2024 was a record year for the Workplace business, they expect continued growth but recognize the need for caution due to exceptionally high performance [120] Other Important Information - The group solvency ratio decreased by 2 percentage points to 188% at the end of December 2024 [28] - Aegon is making steady progress towards reducing capital employed in Financial Assets, targeting $2.2 billion by the end of 2027 [52] - The company completed a program to purchase institutionally owned Universal Life policies ahead of schedule, reducing exposure to mortality risks [9][54] Q&A Session Summary Question: Can you help me understand the moving parts leading you to reiterate your 2025 guidance? - Management reiterated that the guidance remains stable, with favorable tailwinds from higher equity markets and dollar strength, offset by weaker performance in the International segment, particularly in China [66][70] Question: What kind of interest rate benefits are you modeling? - Management indicated that while they are reinvesting at higher rates, competitive pressures are limiting the benefits to operating capital generation [72][73] Question: Can you say what the solvency is now in China? - The local comprehensive solvency ratio in China was reported at 228%, significantly above regulatory thresholds [88] Question: What can you say about potential disposals or restructuring in the international business? - Management confirmed that international businesses are core to the group, with ongoing monitoring of the situation in China, but no plans for disposals [96][101] Question: Is there anything else that you are looking at in your accounting? - Management noted that the reclassification of onerous contracts was appropriate and that they will continue to monitor the situation for any necessary adjustments [108][115]