Aegon Ltd. Q1 FY2025 earnings call

Strategic and Commercial Developments

• Continued executing strategy to grow and transform businesses. Operating capital generation before holding and funding expenses was €267 million, driven by business growth in most strategic assets but offset by unfavorable mortality experience in U.S. financial assets.
• Commercially, it was a good quarter with growth in various regions: U.S. World Financial Group agent base grew, life sales up; retirement plans had positive net deposits; U.K. trends consistent with teach-in webinar; International saw 11% y-o-y increase in new life sales; Asset Management had solid net deposits from third-party clients but net outflows in joint ventures.

Capital Position

• Operating units' capital positions remained solid at the start of market volatility in April. Announced a new share buyback program of €200 million to reduce cash capital at holding to around €1 billion by end-2026, following a €150 million program currently executing.

Americas Commercial Performance

• World Financial Group licensed agents increased 16% to 88,000, with higher activation rates. Life sales grew in WFG and Protection Solutions. RILA product in Protection Solutions grew, making Aegon a top 10 player in the U.S. market. Retirement plans had net deposits but net outflows in midsized plans.

Other Businesses Update

• U.K. Workplace platform business remains strong, but Adviser platform faces challenges from consolidation and withdrawals. International segments saw growth in new life sales, joint ventures with Santander in Spain and Portugal improved, TLB opened a new representative office in Dubai. Asset Management had positive third-party net deposits from global platforms but net outflows in joint ventures.

In the Americas, World Financial Group saw a 16% increase in licensed agents to 88,000 in Q1 2025, with life sales growing in WFG and Protection Solutions. Retirement plans had positive net deposits overall but net outflows in midsized plans, while Protection Solutions' RILA product grew, making Aegon a top 10 player in the U.S. market. In the U.K., the Workplace platform business remains strong, but the Adviser platform is affected by consolidation and withdrawals. In International, new life sales in joint ventures in Brazil and China increased, joint ventures with Santander in Spain and Portugal saw improved sales, TLB opened a new representative office in Dubai. Asset Management had positive third-party net deposits from global platforms but net outflows in joint ventures.

Financial Targets

• Expect to achieve all group financial targets for 2025 as set out at 2023 Capital Markets Day.

Cash Capital Reduction

• Plan to reduce cash capital at holding to around €1 billion by end-2026. Announced a new share buyback program of €200 million, starting in early July 2025 and expected to conclude before year-end.

Operating Capital Guidance

• Expected operating capital generation (OCG) of around €1.2 billion for 2025.

Risks Identified

• Unfavorable mortality experience in U.S. financial assets impacted operating capital generation. Market volatility in April affected hedging programs, with an expected single-digit negative impact on the U.S. RBC ratio in Q2. BMA reviewed eligibility of Aegon's capital instruments, with changes in eligibility of certain bonds, which could impact the group solvency ratio if applied earlier.

Q: About commitment to reduce holding cash and balance between buybacks and M&A A: Commitment to reduce cash capital at holding to €1 billion by end-2026 is firm. Options include reducing leverage (not needed currently), investing in growth, or returning capital to shareholders. The new €200 million share buyback is a step towards reducing cash capital.

Q: On OCG guidance and buyback timeline A: Guidance for OCG is around €1.2 billion for 2025. The share buyback program starts at the beginning of July 2025 and is expected to be completed before year-end. The commitment to reach €1 billion in holding cash by end-2026 remains, with options including share buybacks, special dividends, or growth investments being considered Q: About financial assets in U.S. and dividend policy A: On financial assets, there's natural runoff in the portfolio, but third-party transactions may also be explored. Dividend policy is to aim for €0.40 per share, with capital return policy including share buybacks, special dividends, or growth investments to reduce holding company cash to €1 billion Q: On hedging program performance and new business trends A: Hedging program performed as expected, with some drag from market movements. New business trends show momentum in various segments like U.S. life sales, RILA product, international growth, and U.K. Workplace business, with some segments like U.K. Adviser platform needing time to improve Q: On holding cash debt reduction and long-term care impact A: No immediate plan to reduce debt structurally, but may adjust marginally. Long-term care book is managed via premium rate increases to keep cash flow positive, with no impact on capital generation