Aegon has released its financial results for the second half of 2023, with operational gains offset by realised losses from its investment portfolio, leading to a yearly net loss of €199 million – but its CEO remains up for re-election.
The firm’s operating result for the second half decreased by 32% to €681 million, impacted by the effects of management actions taken previously and one-time benefits realised in the previous period.
For the full year of 2023, Aegon’s operating result declined by 17% to €1,498 million, down from €1,802 million in 2022.
As a result, the company’s shareholders’ equity decreased by €0.7 billion to €7.5 billion, subsequent to capital returns totalling €1.1 billion. Nonetheless, the equity value per share remained steady at €4.27.
The financial services conglomerate also posted losses for the first half of 2023, reflecting previously announced items in the US, CEO Lard Friese said.
On the capital and cash management front, Aegon experienced a 16% increase in operating capital generation in the second half of 2023 compared to the same period in 2022, reaching €660 million, and €1,280 million for the entire year. The capital ratios stayed strong, exceeding the operational levels, with cash capital at the holding company reported at €2.4 billion.
By the end of the year, Aegon had completed €829 million of its announced €1.5 billion share buyback program, bringing its financial leverage down to the targeted level of approximately €5 billion. The company’s free cash flow for the second half was €429 million, which included a special dividend of €75 million from Aegon AM, surpassing the yearly guidance with a total of €715 million, against an expected €600 million.
With these results in mind, Aegon proposes a final 2023 dividend of €0.16 per common share, which increases the total yearly dividend to €0.30 per share, a 30% hike from 2022.
Despite the losses, Aegon has declared its intention to propose Friese for another term as executive director and CEO during its annual general meeting of shareholders (AGM) scheduled for June 12, 2024. Friese has been at the helm of Aegon since 2020.
William Connelly, the chairman of Aegon’s board of directors, expressed strong support for Friese’s re-nomination.
“Under his leadership, Aegon has embarked on a transformation with the ambition to build leading businesses in investment, protection, and retirement solutions. During this period, Aegon has become a more focused company with improved operational performance, a stronger balance sheet, and an enhanced risk profile,” Connelly said.
Connelly, along with the board, reiterated their confidence that Friese will deliver on the execution of Aegon’s strategy and continue to create value for customers and shareholders.
Subject to the approval of his re-election at the 2024 AGM, Friese’s new term would commence immediately following the closure of the meeting on June 12 and extend until the conclusion of the AGM in 2028.
Friese commented on the firm’s second half performance, emphasising the commercial momentum maintained by Aegon, notably through Transamerica’s success in the US, the UK workplace business, and the joint venture in Brazil.
Despite a drop in the IFRS operating result, Friese highlighted substantial operating capital generation as the main measure of business performance, which exceeded the year’s initial expectations.
Transamerica’s initiative to become the leading middle market life insurance and retirement company in America was reiterated by Friese, with the business reporting new life sales of US$486 million, a 13% increase from the previous year, and the highest in eight years.
The World Financial Group, on the other hand, saw an 18% increase in its number of agents, reaching almost 74,000. Sales of mid-sized plans in the workplace solutions business jumped by 72% to US$6.7 billion, driven by growth in both single employer and pooled plans.
Despite losing a large, low-margin pension scheme, Aegon’s UK Workplace platform also experienced positive net inflows in 2023 and anticipates continued growth from the onboarding of new schemes and increased net deposits on existing ones. However, Aegon’s UK Retail platform and asset management business faced net outflows due to the adverse macro-economic environment.
In the insurance joint venture sphere, new life sales in Brazil at Mongeral Aegon Group rose by 37% to €144 million, and in China, sales increased by 19% to €103 million in 2023.
Friese also noted that 76% of the current €1.5 billion share buyback program had been completed by February 23, 2023, and the company’s de-leveraging plans were successfully executed.
“I am very proud of everything the teams have achieved in 2023, and I am grateful for all their work during another transformational year. We will continue to work hard executing our strategy in 2024,” Friese said. “Our strong commercial performance, together with the important steps we took to realign our company, have given us a solid foundation on which to sustainably grow our dividend per share. We also look forward to presenting the strategy for our UK business in more depth during a teach-in session on June 25 this year.”
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