Aegon Earnings: Volatile 2023, but Not Much Has Changed

With Aegon’s delivery of full-year earnings, our expectations for the firm remain the same. The main news is that Aegon has delivered on its financial commitments. However, operations look troubled in the UK. With initial guidance of EUR 1 billion in operating capital, Aegon has delivered EUR 1.28 billion, before holding and funding expenses. However, that beat is due to a slightly lower new business strain than was expected, EUR 624 million versus EUR 700 million; a net favorable benefit of EUR 105 million from EUR 160 million in operational variances; and negative EUR 55 million in higher claims. Ultimately, this means the operating capital generated is slightly above EUR 1 billion guidance. The EUR 1.1 billion operating capital generation target for 2024 remains. That will be helped by higher equity market account values delivering higher fees. Operationally, in World Financial Group licensed agents have grown to 74,000 versus 63,000 in the prior year, higher than the 72,000 we expected. The targets of 90,000 for 2025 and 110,000 for 2027 remain. World Financial's multiticket agents are also higher at 36,000, growth of 12.5%, but 2,000 lower than we expected. New life sales in US individual universal life are better than we projected at $486 million, growth of 12.5%. These two businesses are the largest contributors to US strategic asset earnings. Most operating metrics for the US workplace business point to better development, with advancement in sales of midsize plans, net deposits, and assets under administration. However, earnings on "in-force," an economic earnings metric, are down about $20 million because of investment in technology and employees. On the other hand, the UK business is not faring well, with strong outflows of retail deposits continuing. Those should stabilise.