Aegon reports third quarter 2021 results
Please click here to access all 3Q2021 results related
documents
The Hague, November 11, 2021 -
Consistent execution
on strategic initiatives; results impacted
by adverse mortality experience
- Net loss of EUR 60 million reflects a EUR 470 million one-time
charge as a result of management actions to release capital and
increase the predictability of capital generation from the US
variable annuity business, in line with prior guidance
- Operating result decreases by 16% compared with the third
quarter of 2020 to EUR 443 million, as adverse claims experience in
the US – with COVID-19 and a higher average claim size as the most
important drivers – more than offsets increased fees from higher
equity markets and the positive contribution from business
growth
- Cash Capital at Holding decreases to EUR 961 million, which
reflects EUR 192 million dividends to shareholders and EUR 212
million deleveraging in this quarter
- The capital ratios of all three main units remain above their
respective operating levels; Group Solvency II ratio increases to
209%
Statement of Lard Friese, CEO“In the third
quarter of 2021, we continued to drive our transformation forward
by delivering on our financial and strategic commitments.
Performance improvements across most of our businesses, supported
by the disciplined execution of our operational improvement plan,
were offset by elevated mortality in the United States.
This quarter’s operating result reflects the benefit from
addressable expense savings that we have achieved so far. We remain
on track to deliver our target of EUR 400 million expense savings
by 2023. To date, we have executed 684 out of 1,200 performance
improvement initiatives, with expense initiatives representing the
majority thereof. Benefits from implemented growth initiatives can
be seen in the results from Strategic Assets and Growth Markets,
and our Asset Management business extended its track record of over
nine years of positive third-party net deposits.
We remain proactive in the management of our Financial Assets.
In the third quarter, we launched the lump sum buy-out program for
certain variable annuity policyholders. This was well received by
customers, which can be seen by the 8% take-up rate as of the end
of September. Moreover, since the end of the third quarter, the
guarantees on the remaining variable annuity portfolio are being
fully hedged against equity and interest rate risk, reducing our
economic sensitivity to financial markets.
In our long-term care business, we have already achieved
approval for more than USD 300 million worth of rate increases, and
consequently, we have increased our expectations for the rate
increase program to USD 450 million; underscoring our track record
of actively managing this business. On top of that, we took a
series of incremental management actions in the US and the
Netherlands to improve our risk profile, maintain a strong balance
sheet and increase the value of our portfolio.
While we are making good progress on our strategic and financial
commitments, our US Life business experienced adverse mortality in
part from the ongoing impact of COVID-19. We expect the impact from
COVID-19 to abate over time. A higher average claim size also
contributed to this quarter’s mortality experience. We are in the
process of taking management actions to reduce the volatility in
mortality experience in the United States.
Recognizing the role that Aegon plays within our broader
society, we continue to progress with our approach to
sustainability and responsible investing. Last week, we announced
our Group-wide commitment to transitioning our general account to
net-zero greenhouse gas emissions by 2050, with an intermediate
goal set for 2025. Ahead of COP26, Aegon UK – in partnership with
Aegon Asset Management – launched its innovative Global Sustainable
Sovereign Bond Fund. The fund invests in those countries that are
making the best progress towards the United Nations Sustainable
Development Goals, and allows our workplace pensions customers to
align their investment objectives with the goal of a fair and
sustainable future.
And finally, as we look back at the third quarter, I also want
to take a moment to recognize our 22,000 colleagues who are driving
Aegon’s transformation. The pandemic has fundamentally changed the
way in which we work and the way we interact with our stakeholders.
And while the way we interact may have changed, our colleagues
remain committed to transforming Aegon into a high-performance
organization.”
Note: All comparisons in this release are against 3Q 2020,
unless stated otherwise. See page 8 of this press release for a
full financial overview.
Media
relations |
Investor
relations |
Conference call
including Q&A (9:00 a.m. CET) |
Dick
Schiethart |
Jan Willem
Weidema |
Audio webcast on
aegon.com |
+31 (0) 70 344
8821gcc@aegon.com |
+31 (0) 70 344
8028ir@aegon.com |
United States: +1
720 543 0206United Kingdom: +44 330 336 9434The Netherlands: +31 20
703 8259 |
|
|
Passcode:
9702174 |
Additional information
PresentationThe conference call presentation is
available on aegon.com as of 7.30 a.m. CET.
SupplementsAegon’s 3Q 2021 Financial Supplement
and other supplementary documents are available on aegon.com.
Conference call including Q&A
The conference call starts at 9:00 a.m. CET,
with an audio webcast on aegon.com. Two hours after the
conference call, a replay will be available on aegon.com.
Click to join conference callWith ‘click to
join’, there is no need to dial-in for the conference call. Simply
click the link below, enter your information and you will be
called back to directly join the conference. The link becomes
active 15 minutes prior to the scheduled start time. Click
here to connect. Should you wish not to use the ‘click to join’
function, dial-in numbers are also available.
Dial-in numbers for conference callUnited
States: +1 720 543 0206United Kingdom: +44 (0)330 336 9434The
Netherlands: +31 (0) 20 703 8259
Passcode: 9702174
Financial calendar
2021-2022Fourth quarter 2021 results – February 9,
2022First quarter 2022 results – May 12, 2022Annual General Meeting
– May 31, 2022Second quarter 2022 results – August 11, 2022Third
quarter 2022 results – November 10, 2022
About Aegon
Aegon’s roots go back more than 175 years – to the first half of
the nineteenth century. Since then, Aegon has grown into an
international company, with businesses in the Americas, Europe and
Asia. Today, Aegon is one of the world’s leading financial services
organizations, providing life insurance, pensions and asset
management. Aegon’s purpose is to help people achieve a lifetime of
financial security. More information on aegon.com.
Cautionary note regarding non-IFRS-EU
measuresThis document includes the following non-IFRS-EU
financial measures: operating result, income tax, result before
tax, market consistent value of new business, return on equity and
addressable expenses. These non-IFRS-EU measures, except for
addressable expenses, are calculated by consolidating on a
proportionate basis Aegon’s joint ventures and associated
companies. The reconciliation of these measures, except for market
consistent value of new business and return on equity, to the most
comparable IFRS-EU measure is provided in the notes to this press
release. Market consistent value of new business is not based on
IFRS-EU, which are used to report Aegon’s primary financial
statements and should not be viewed as a substitute for IFRS-EU
financial measures. Aegon may define and calculate market
consistent value of new business differently than other companies.
Return on equity is a ratio using a non-IFRS-EU measure and is
calculated by dividing the operating result after tax less cost of
leverage by the average shareholders’ equity excluding the
revaluation reserve. Operating expenses are all expenses associated
with selling and administrative activities (excluding commissions)
after reallocation of claim handling expenses to benefits paid.
This includes certain expenses recorded in other charges, including
restructuring charges. Addressable expenses are expenses reflected
in the operating result, excluding deferrable acquisition expenses,
expenses in joint ventures and associates and expenses related to
operations in CEE countries. Aegon believes that these non-IFRS-EU
measures, together with the IFRS-EU information, provide meaningful
supplemental information about the operating results of Aegon’s
business including insight into the financial measures that senior
management uses in managing the business.
Local currencies and constant currency exchange
ratesThis document contains certain information about
Aegon’s results, financial condition and revenue generating
investments presented in USD for the Americas and in GBP for the
United Kingdom, because those businesses operate and are managed
primarily in those currencies. Certain comparative information
presented on a constant currency basis eliminates the effects of
changes in currency exchange rates. None of this information is a
substitute for or superior to financial information about Aegon
presented in EUR, which is the currency of Aegon’s primary
financial statements.
Forward-looking statementsThe statements
contained in this document that are not historical facts are
forward-looking statements as defined in the US Private Securities
Litigation Reform Act of 1995. The following are words that
identify such forward-looking statements: aim, believe, estimate,
target, intend, may, expect, anticipate, predict, project, counting
on, plan, continue, want, forecast, goal, should, would, could, is
confident, will, and similar expressions as they relate to Aegon.
These statements are not guarantees of future performance and
involve risks, uncertainties and assumptions that are difficult to
predict. Aegon undertakes no obligation to publicly update or
revise any forward-looking statements. Readers are cautioned not to
place undue reliance on these forward-looking statements, which
merely reflect company expectations at the time of writing. Actual
results may differ materially from expectations conveyed in
forward-looking statements due to changes caused by various risks
and uncertainties. Such risks and uncertainties include but are not
limited to the following:
- Changes in general economic and/or governmental conditions,
particularly in the United States, the Netherlands and the United
Kingdom;
- Changes in the performance of financial markets, including
emerging markets, such as with regard to:
- The frequency and severity of defaults by issuers in Aegon’s
fixed income investment portfolios;
- The effects of corporate bankruptcies and/or accounting
restatements on the financial markets and the resulting decline in
the value of equity and debt securities Aegon holds; and
- The effects of declining creditworthiness of certain public
sector securities and the resulting decline in the value of
government exposure that Aegon holds;
- Changes in the performance of Aegon’s investment portfolio and
decline in ratings of Aegon’s counterparties;
- Lowering of one or more of Aegon’s debt ratings issued by
recognized rating organizations and the adverse impact such action
may have on Aegon’s ability to raise capital and on its liquidity
and financial condition;
- Lowering of one or more of insurer financial strength ratings
of Aegon’s insurance subsidiaries and the adverse impact such
action may have on the written premium, policy retention,
profitability and liquidity of its insurance subsidiaries;
- The effect of the European Union’s Solvency II requirements and
other regulations in other jurisdictions affecting the capital
Aegon is required to maintain;
- Changes affecting interest rate levels and continuing low or
rapidly changing interest rate levels;
- Changes affecting currency exchange rates, in particular the
EUR/USD and EUR/GBP exchange rates;
- Changes in the availability of, and costs associated with,
liquidity sources such as bank and capital markets funding, as well
as conditions in the credit markets in general such as changes in
borrower and counterparty creditworthiness;
- Increasing levels of competition in the United States, the
Netherlands, the United Kingdom and emerging markets;
- Catastrophic events, either manmade or by nature, including by
way of example acts of God, acts of terrorism, acts of war and
pandemics, could result in material losses and significantly
interrupt Aegon’s business;
- The frequency and severity of insured loss events;
- Changes affecting longevity, mortality, morbidity, persistence
and other factors that may impact the profitability of Aegon’s
insurance products;
- Aegon’s projected results are highly sensitive to complex
mathematical models of financial markets, mortality, longevity, and
other dynamic systems subject to shocks and unpredictable
volatility. Should assumptions to these models later prove
incorrect, or should errors in those models escape the controls in
place to detect them, future performance will vary from projected
results;
- Reinsurers to whom Aegon has ceded significant underwriting
risks may fail to meet their obligations;
- Changes in customer behavior and public opinion in general
related to, among other things, the type of products Aegon sells,
including legal, regulatory or commercial necessity to meet
changing customer expectations;
- Customer responsiveness to both new products and distribution
channels;
- As Aegon’s operations support complex transactions and are
highly dependent on the proper functioning of information
technology, operational risks such as system disruptions or
failures, security or data privacy breaches, cyberattacks, human
error, failure to safeguard personally identifiable information,
changes in operational practices or inadequate controls including
with respect to third parties with which we do business may disrupt
Aegon’s business, damage its reputation and adversely affect its
results of operations, financial condition and cash flows;
- The impact of acquisitions and divestitures, restructurings,
product withdrawals and other unusual items, including Aegon’s
ability to integrate acquisitions and to obtain the anticipated
results and synergies from acquisitions;
- Aegon’s failure to achieve anticipated levels of earnings or
operational efficiencies, as well as other management initiatives
related to cost savings, cash capital at Holding, gross financial
leverage and free cash flow;
- Changes in the policies of central banks and/or
governments;
- Litigation or regulatory action that could require Aegon to pay
significant damages or change the way Aegon does business;
- Competitive, legal, regulatory, or tax changes that affect
profitability, the distribution cost of or demand for Aegon’s
products;
- Consequences of an actual or potential break-up of the European
monetary union in whole or in part, or the exit of the United
Kingdom from the European Union and potential consequences if other
European Union countries leave the European Union;
- Changes in laws and regulations, particularly those affecting
Aegon’s operations’ ability to hire and retain key personnel,
taxation of Aegon companies, the products Aegon sells, and the
attractiveness of certain products to its consumers;
- Regulatory changes relating to the pensions, investment, and
insurance industries in the jurisdictions in which Aegon
operates;
- Standard setting initiatives of supranational standard setting
bodies such as the Financial Stability Board and the International
Association of Insurance Supervisors or changes to such standards
that may have an impact on regional (such as EU), national or US
federal or state level financial regulation or the application
thereof to Aegon, including the designation of Aegon by the
Financial Stability Board as a Global Systemically Important
Insurer (G-SII); and
- Changes in accounting regulations and policies or a change by
Aegon in applying such regulations and policies, voluntarily or
otherwise, which may affect Aegon’s reported results, shareholders’
equity or regulatory capital adequacy levels.
This document contains information that qualifies, or may
qualify, as inside information within the meaning of Article 7(1)
of the EU Market Abuse Regulation (596/2014). Further details of
potential risks and uncertainties affecting Aegon are described in
its filings with the Netherlands Authority for the Financial
Markets and the US Securities and Exchange Commission, including
the Annual Report. These forward-looking statements speak only as
of the date of this document. Except as required by any applicable
law or regulation, Aegon expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change
in Aegon’s expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is
based.
- 20211111_PR_Aegon reports 3Q 2021 results
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