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Aegon Ltd ADR AEG

Morningstar Rating
$5.58 −0.34 (5.74%)
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Company Report

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.

Price vs Fair Value

AEG is trading at a 9% discount.
Price
$5.58
Fair Value
$6.30
Uncertainty
Medium
1-Star Price
$5.56
5-Star Price
$9.43
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Aegon is really knuckling down on a turnaround and investing in stable earnings and low-capital requirement strategic assets where nascent signs of competitive advantage lie.

Bears

There is a still long runway for releasing capital out of financial assets, and investors are still unsure of the validity of using it internally rather than delivering it back to shareholders.

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News

Trading Information

Previous Close Price
$5.92
Day Range
$5.575.71
52-Week Range
$4.026.03
Bid/Ask
$5.58 / $5.64
Market Cap
$9.86 Bil
Volume/Avg
6.4 Mil / 1.7 Mil

Key Statistics

Price/Earnings (Normalized)
9.44
Price/Sales
0.41
Dividend Yield (Trailing)
5.01%
Dividend Yield (Forward)
5.01%
Total Yield
12.23%

Company Profile

Aegon Ltd is a life insurance and long-term savings company listed in the Netherlands. It listed on the Amsterdam Stock Exchange in the 1980s and now has mature operations in the United States, United Kingdom, and four growth markets of Brazil, China, Portugal, and Spain. Over recent years, Aegon has been moving through a substantial transformation program where management has sought to divest noncore operations and improve the risk profile of the business by separating the company into strategic and financial assets. Financial assets are the parts of the business that are now being run down. Here, Aegon is looking to cycle out of highly capital-consumptive and volatile earnings products and recycle funds into capital-light and more predictable strategic business groups.
Sector
Financial Services
Industry
Insurance - Diversified
Stock Style Box
Mid Core
Total Number of Employees
19,087

Competitors

Valuation

Metric
AEG
ALV
AXAHY
Price/Earnings (Normalized)
9.4412.9810.38
Price/Book Value
0.981.801.56
Price/Sales
0.410.560.86
Price/Cash Flow
2.179.94
Price/Earnings
AEG
ALV
AXAHY

Financial Strength

Metric
AEG
ALV
AXAHY
Quick Ratio
Current Ratio
Interest Coverage
−9.849.6217.86
Quick Ratio
No chart available

Profitability

Metric
AEG
ALV
AXAHY
Return on Assets (Normalized)
−0.28%1.27%1.16%
Return on Equity (Normalized)
−7.79%23.06%16.49%
Return on Invested Capital (Normalized)
−4.30%17.23%6.96%
Return on Assets
AEG
ALV
AXAHY
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Insurance - Diversified Industry Comparables

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Name
Morningstar Rating for Stocks
Economic Moat
Market Cap
BRK.A
Berkshire Hathaway Inc Class AXyjdc$881.5 Bil
BRK.B
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ALIZY
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AXAHY
AXA SA ADRXjvds$78.3 Bil
ZURVY
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AIG
American International Group IncVqrgc$49.6 Bil
SLF
Sun Life Financial IncYgq$31.2 Bil
AVVIY
Aviva PLC ADRQhqz$15.5 Bil
AGESY
Ageas SA/ NV ADRKzbfd$7.7 Bil

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