Aegon’s trading update for the first quarter 2023

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Algemeen advies 17/05/2023 08:51
Consistent delivery on strategic and financial objectives in a volatile market

Operating capital generation before holding funding and operating expenses increases by 5% compared with the first quarter of 2022 to EUR 292 million. This reflects business growth, an improvement in claims experience, and lower expenses
The capital ratios of all three main units remain above their respective operating levels; Group Solvency II ratio increases to 210%
As a result of the repurchase of shares related to the ongoing EUR 200 million share buyback program, Cash Capital at Holding decreases to EUR 1.4 billion, which is in the upper half of the operating range
Continued progress on transformation agenda; on track for the closing of the transaction to combine Aegon’s Dutch businesses with a.s.r. in the second half of 2023
Strong sales growth in US Strategic Assets, UK Workplace business, and life insurance businesses in China and Brazil. Sales momentum in Asset Management and UK Retail businesses affected by challenging market conditions
As previously announced, Aegon has adjusted its reporting format to trading updates for the first and third quarters with a focus on selected key performance metrics, including operating capital generation, capital positions, and sales metrics. Aegon will report IFRS results for the first half-year and second half-year to align with a.s.r.’s reporting cycle.

Statement of Lard Friese, CEO
"Aegon has had a good start to the year. We delivered strong commercial growth and advanced our strategic priorities in the first quarter. I am pleased with the headway we are making despite persistent volatility in the financial markets.

We have made good progress with preparations for the closing of the transaction to combine Aegon’s Dutch businesses with a.s.r. Thanks to the commitment and hard work of our colleagues, we remain on course to close the transaction in the second half of this year.

During the first quarter, we continued to reallocate capital to those businesses where we can build leading positions and generate attractive returns. We sold our Protection business in the UK and divested a legacy block of direct marketing business in Asia. At the same time, we strengthened our asset management capabilities through the acquisition of NIBC’s European Collateralized Loan Obligation activities.

We delivered strong sales growth in all of our US Strategic Assets, and in our life insurance businesses in China and Brazil. In the UK Workplace business, we are also gaining traction as a growing number of new customers are entrusting their retirement savings to us. However, commercial momentum in our asset management and UK Retail businesses was affected by reduced investor confidence as a result of the challenging market conditions.

Against a backdrop of persistent volatility in the financial markets, we maintained a strong balance sheet with EUR 1.4 billion Cash Capital at the Holding. The capital positions of all main units remained above their respective operating levels, benefiting from the actions we have taken in the past few years to improve our risk profile. Given our capital strength and our improved operational performance – as underscored by the growth in our operating capital generation – I am confident that we will deliver on our strategic commitments and on our 2023 financial guidance. I look forward to providing an update on our strategic plans and medium-term financial objectives at our Capital Markets Day on June 22, 2023.”

Note: all comparisons in this release are against 1Q 2022, unless otherwise stated.

Aegon is taking significant steps to transform the company in order to improve its performance and create value for all of its stakeholders. Aegon focuses on three core markets (the United States, the Netherlands, and the United Kingdom), three growth markets (Spain & Portugal, Brazil, and China) and one global asset manager.

Aegon’s businesses within its core markets have been separated into Financial Assets and Strategic Assets. The aim is to release capital from Financial Assets and from businesses outside of Aegon’s core perimeter, and to re allocate capital to growth opportunities in Strategic Assets, growth markets and the global asset manager.

In this press release, Aegon provides an update on the strategic developments and business performance in its four key reporting segments:

• Americas;
• United Kingdom;
• Asset Management; and
• International.

On October 27, 2022, Aegon announced that it had reached an agreement with a.s.r. to combine its Dutch pension, life and non-life insurance, banking, and mortgage origination activities with a.s.r. In light of that action, Aegon the Netherlands is no longer reported as a separate segment.

Throughout its transformation, Aegon aims to maintain a solid capital position in its business units and at the Holding. Through proactive risk management actions, Aegon is improving its risk profile and reducing the volatility of its capital ratios. This is underscored by the capital strength reported in this trading update.

2023 Capital Markets Day
On June 22, 2023, Aegon will host a Capital Markets Day to provide an update on its strategy and medium-term financial targets. This will include plans to profitably grow its businesses and maximize the value from Financial Assets, with a focus on Aegon’s largest business unit, Transamerica.

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