Aegon Ltd. Q3 FY2023 earnings call

• Transamerica continues to deliver on growth in U.S. strategic assets.
• Operating capital generation before holding and funding expenses increased 16% to €354 million in Q3 2023.
• Share buyback program: 45% completed, on track to complete by end of June 2024 with €1.5 billion program.
• Redomiciliation to Bermuda provides stability for executing strategy.
• Investments in U.S. Individual Solutions (improving agent service experience, growing new life sales) and Workplace Solutions (net deposits in midsize plans, growth in written sales).
• Strategic initiatives in asset management, including partnership with a.s.r. and acquisitions, aim to improve earnings and capabilities.

U.S. Strategic Assets

• Transamerica: Licensed agents at 69,000 (+17% y-o-y), multi-ticket agents up 16% y-o-y. New life sales up 10% y-o-y, with World Financial Group accounting for 71% of total new Individual Solutions life sales. Net deposits in midsize workplace plans $243 million, written sales in midsize plans doubled to $1.8 billion y-o-y. Earnings on in-force in retirement plans $22 million.

UK Activities

• Workplace channel: Net outflows £0.4 billion (excluding one low-margin plan, net deposits £0.5 billion). Retail channel weak due to cost of living crisis, annualized revenues lost on net deposits £6 million.

Growth Markets

• New life sales in growth markets up 34% y-o-y, driven by Brazilian joint venture (new life sales almost doubled). Non-life new premium production in Spain and Portugal up 9%. Operating capital generation of international segment excluding TLB increased due to business growth.

Asset Manager

• Third-party net outflows in global platforms €1.2 billion. Net deposits in Chinese joint venture AIFMC offset by outflows in La Banque Postale joint venture. Operating capital generation declined. Strategic initiatives like partnership with a.s.r. and acquisitions accretive to earnings, expected annualized revenue uplift of ~€20 million from a.s.r. partnership

• Full year 2023 operating capital generation from unit expected around €1.2 billion (increase from previous guidance of over €1 billion).
• Share buyback program: 45% completed, on track to finish by end of June 2024.
• Guidance for next year remains at ~€1.1 billion operating capital generation, with potential pluses/minuses but still comfortable with the figure.

• Market conditions challenging asset manager, leading to net outflows.
• Regulatory changes in Chinese asset management joint venture causing margin pressure.
• Cost of living crisis in UK negatively impacting retail channel.
• Competition in UK workplace business leading to client outflows.
• Mortality risk in universal life portfolio, though progress is being made in policyholder buyouts to mitigate risk.

Q: On capital generation, can you provide the bridge to underlying operating capital generation for the quarter and thoughts on structural positive experience variances? Also, any impact from unit linked miss selling court ruling on a.s.r. holding?

A: Lard Friese notes they're not commenting on the unit linked topic as it's owned by a.s.r., but remain pleased with the strategic shareholding. Matt Rider explains OCG bridge with ~€81 million of operational and experience variances, emphasizing use of management best estimate assumptions and expecting clean run rate.

Q: On OCG guidance, impact of cash balance on investment return and one-off items linked to interest rates? Also, operating capital generation impact of buying out more policyholder universal life contracts?

A: Matt Rider says cash balance holding benefits less from investment return, but OCG guidance remains ~€1.1 billion. One-off items linked to interest rates are mostly one-off, but potential for more if rates stay. On policyholder buyout, buying out 50% more would further reduce mortality risk and improve operating capital generation.