Aegon reported its trading update for Q3 2024, citing an operating capital generation (OCG) of €336 million before holding funding and operating expenses, raising its full-year OCG guidance to around €1.2 billion from the prior estimate of €1.1 billion.
Aegon noted that capital ratios across its main units continue to exceed operational levels, reinforcing its financial position. Additionally, the company announced a new €150 million share buyback programme, with completion targeted in the first half of 2025. This buyback includes offsetting shares issued through share-based compensation plans.
Cash capital at the holding level was €1.5 billion as of 30 September 2024, with expectations to reach the midpoint of the target range, approximately €1 billion, by the end of 2026. Aegon also completed a programme to acquire universal life policies from institutional owners, an action that negatively affected the US risk-based capital (RBC) ratio by 16 percentage points.
However, an 8 percentage-point improvement is anticipated in Q4 2024 following equity funding repayment, with benefits expected for operating capital generation as previously outlined.
Commercially, Aegon reported robust momentum in its asset management and UK workplace platform sectors, although US strategic assets encountered some volatility. The UK adviser platform continued to face market-related challenges.
Aegon CEO Lard Friese (pictured above) commented on the quarter, noting that the company remains aligned with its strategic goals set at the 2023 Capital Markets Day. In the US, the number of World Financial Group agents increased by 19% year-over-year to nearly 82,500, with a notable shift toward third-party annuity product sales in Q3, which contributed to WFG revenues but impacted Individual Life sales.
Mid-sized retirement plans in the US experienced net outflows of $0.4 billion as high withdrawal rates were partly offset by increased gross deposits.
Friese also noted that Aegon's UK business is progressing toward its goal of becoming a digital savings and retirement platform, as highlighted in its June 2024 Strategy Teach-In. The UK workplace platform showed net inflows of £0.9 billion, while the Adviser platform continued to see expected outflows.
Aegon asset management maintained its growth trajectory, recording €4 billion in third-party net deposits across Global Platforms and Strategic Partnerships, largely from alternative fixed-income products. The company’s international business faced cyclical pressures, including the impact of higher interest rates in Brazil.
Aegon continued to implement its US strategy to reduce exposure to financial assets, completing the purchase of institutional universal life policies. While this programme negatively impacted the RBC ratio, the company anticipates positive contributions to OCG in the future.
With €336 million in OCG generated during the quarter, largely from the US market, Aegon’s year-to-date OCG now exceeds €900 million. The company revised its full-year OCG expectation to approximately €1.2 billion, up from €1.1 billion previously projected. Aegon’s cash capital at the holding level was reported at €1.5 billion, with strong capital positions across units.
In line with its capital management framework, Aegon also announced plans for a new €150 million share buyback programme expected to start in January 2025 and conclude by mid-year. Additionally, Aegon expects to align its cash capital at holding to the midpoint of its target range, between €0.5 billion and €1.5 billion, by the end of 2026.
Aegon also noted that its forward strategy aims for around €1.2 billion in OCG and €800 million in free cash flow from its units by 2025. The insurer targets a potential dividend per share increase to approximately €0.40 by 2025, subject to approvals and market conditions, with gross financial leverage expected to stay near €5 billion.
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