Aegon Ltd. (AEG) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary presents a balanced view. Financial performance and product development are strong, with positive mortality variances and high new business strain. Market strategy and shareholder return plans are optimistic, with investments in growth and a focus on IFRS. The Q&A reveals some uncertainties, such as unclear management responses and legal settlements, but overall sentiment remains positive due to strong operational metrics and optimistic guidance.
Key Financial Performance
Operating capital generation before holding and funding expenses EUR 1.3 billion, increased year-over-year. Reasons: Business growth across all units, stable market impacts, and improved experience variances in the Americas and international businesses.
Operating results EUR 1.7 billion, increased by 15% compared with 2024. Reasons: Business growth across all units, stable market impacts, and improved experience variances in the Americas and international businesses.
Free cash flow EUR 829 million, consistent with the target. Reasons: Strong capital position and financial performance.
Final dividend per common share EUR 0.21, resulting in a full year 2025 dividend of EUR 0.40 per share, up 14% from EUR 0.35 per share over 2024. Reasons: Strong financial performance.
Share buybacks EUR 400 million executed in the second half of 2025. Reasons: Capital return to shareholders.
New life sales Increased by 10% compared with 2024. Reasons: Higher agent productivity, higher average premium per policy, and growth in specific products like final expense and RILA sales.
Indexed annuity net deposits Increased by 45% in 2025. Reasons: Higher gross deposits and improved wholesale distribution productivity.
Net inflows in midsized retirement plans business Positive in 2025. Reasons: Strong positioning in the pool plan space and a large takeover deposit earlier in the year.
Operating results (second half 2025) EUR 858 million, increased by 11% year-on-year. Reasons: Business growth and favorable variances across all units.
Cash capital at holding EUR 1.3 billion at the end of 2025, decreased. Reasons: Capital distributions to shareholders in the form of dividend payments and share buybacks.
Gross financial leverage Stable at EUR 4.9 billion. Reasons: No significant changes in financial structure.
Group solvency ratio 184%, robust. Reasons: Strong capital position and financial management.
U.S. RBC ratio 424%, increased by 4 percentage points compared to June 2025. Reasons: Operating capital generation and remittances to the holding.
Valuation equity per share EUR 9.06 per share, increased by 7 percentage points over the second half of 2025. Reasons: Positive contributions from shareholders' equity and the CSM balance after tax.
OCG before holding, funding, and operating expenses Increased by 8% compared with the second half of 2024. Reasons: Favorable mortality and morbidity claims experience, favorable release of required capital, and reduction in short-term financing.
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Operating Highlights
New life sales: Increased by 10% compared with 2024, driven by higher productivity and higher average premiums per policy sold.
Annuities sales: Increased by 6% due to productivity improvements in wholesale distribution.
Indexed annuity net deposits: Achieved a 45% increase in 2025.
Final expense product: Strong new life sales through a fully digital underwriting platform.
U.S. strategic assets: Continued growth in WFG, new life sales, and retirement plan assets.
Brazil joint venture: Higher new life sales, particularly in credit life products.
Spain and Portugal: Reported growth in new life sales.
China: New life sales negatively impacted by changes to product pricing and economic environment.
Operating capital generation: Increased year-over-year to EUR 1.3 billion, ahead of target.
Operating results: Increased by 15% compared with 2024 to EUR 1.7 billion.
Free cash flow: Achieved EUR 829 million for 2025, consistent with target.
Dividend per share: Proposed a final dividend of EUR 0.21 per share, resulting in a full-year dividend of EUR 0.40 per share, up 14% from 2024.
Relocation to the U.S.: Preparations for relocation progressing as planned, including U.S. GAAP implementation.
Capital employed in financial assets: Reduced to $2.7 billion, ahead of target.
Share buybacks: Executed EUR 400 million in 2025 and launched a new EUR 400 million program for 2026.
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Risk or Challenges
China new life sales: Negatively impacted by changes to product pricing to reflect the new pricing regulations and the current economic environment.
Aegon U.K. Adviser Platform business: Net outflows in 2025 reflected ongoing consolidation and vertical integration in nontarget adviser segments.
SGUL reinsurance transaction: Realized losses on assets transferred in the context of the transaction, which were unfavorable in the period.
Net impairments: Reflect an ECL reserve increase from new investment purchases as well as a small number of downgrades and defaults of bond investments.
Fair value items: Negative mostly from revaluations of solvency hedges in the U.K.
U.S. RBC ratio: Negatively impacted by onetime items and management actions during the period.
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Guidance & Outlook
Revenue Growth: The company aims to grow the operating result of the group by around 5% per year over the 2026 to 2027 period, from the EUR 1.5 billion to EUR 1.7 billion run rate in 2025, assuming an exchange rate of $1.20 per euro.
Agent Expansion: The company plans to grow the number of licensed agents in the Americas to around 110,000 by 2027, up from nearly 96,000 at the end of 2025.
Productivity Improvements: Initiatives to improve agent productivity are expected to continue driving higher policy sales and premiums per policy.
Indexed Annuity Growth: The company achieved a 45% increase in indexed annuity net deposits in 2025 and aims to sustain growth through improved wholesale distribution productivity.
Retirement Plans Business: The midsized retirement plans business is expected to maintain solid written sales and net inflows, supporting gross deposits going forward.
Workplace Platform Growth: Aegon U.K. expects continued growth in net deposits driven by onboarding new schemes and members, as well as regular contributions from existing schemes.
Asset Management Expansion: The company plans to grow its higher revenue margin third-party business by expanding CLO warehouse capacity in the U.S. and Europe.
Capital Allocation: The company aims to reach the midpoint of the operating range for cash capital at holding around EUR 1.0 billion by the end of 2026.
Share Buyback Program: A share buyback program for 2026 totaling EUR 400 million has been announced, with the first half of EUR 227 million expected to be completed by June 30, 2026.
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Shareholder Return Plan
Proposed Final Dividend: EUR 0.21 per common share, resulting in a full year 2025 dividend of EUR 0.40 per share, up 14% from EUR 0.35 per share over 2024.
Share Buybacks: Executed EUR 400 million of share buybacks in the second half of 2025. Currently executing the first half of a new EUR 400 million buyback program for 2026.
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Key Q&A
Q:What is the sustainability of the operating profit in the second half of the year, given the growth in CSM and strategic assets?
A:The second half operating result, after adjusting for favorable or unfavorable items, is a reasonable representation of the underlying figure. It benefited from strong markets in the second half of the year, leaving the company in a good position to hit targets outlined at the Capital Markets Day in December.
Q:What is the company's stance on the ASR stake and the impact of redomiciliation to the U.S. and proposed tax legislation in the Netherlands?
A:The company is happy with the ASR shareholding and has given guidance that it would sell if it hits intrinsic value or if there is an alternative use of the capital. The redomiciliation to the U.S. and proposed tax legislation in the Netherlands have no impact on the ownership position with ASR.
Q:What conditions are needed for OCG to be closer to the top besides currency movements, and what is the expected new business strain for the coming years?
A:The OCG had a strong quarter, supported by positive mortality and morbidity variances, high new business strain due to strong commercial performance, and a high release of required capital. Adjusting for these favorable items and FX, the underlying run rate is at the bottom end. The company feels confident in achieving its Capital Markets guidance for 2026 and 2027.
Q:What are the trends in WFG results, including agent productivity and cost income, and the investment program for 2025?
A:WFG has seen lower margins due to strong sales growth and productivity growth, with more agents producing higher premium per policy sales. Investments are being made in leadership, governance, technology, training, compliance, and field support to strengthen the growing business. The company expects operating margins to remain at the lower end, with profit growth driven by revenue growth.
Q:What is the magnitude and process of the legal settlement, and what are the criteria for the U.K. strategic review sale?
A:The legal settlements pertain to two cases included in the $230 million of charges in the U.S. The cases are described in the annual report and need court approval. For the U.K. strategic review, the company will not comment until an update is available, expected before the summer. The review includes the insurance and platform businesses but excludes the asset management office.
Q:Can you provide a waterfall to the underlying OCG and discuss trends in mortality improvement?
A:The clean 4Q OCG was around EUR 294 million compared to the reported EUR 372 million. Positive impacts included EUR 47 million in the U.S. from favorable claims experience, EUR 31 million in other units, and elevated release of required capital. Mortality improvement was favorable in younger and very old ages, and the company is happy with performance versus best estimates.
Q:What are the plans for financial assets and the shift in focus to IFRS in the presentation?
A:The company continues to look for ways to reduce the $2.7 billion in required capital for financial assets through management actions, policyholder engagement, and third-party actions. The shift to IFRS aims to simplify communication, with targets that are simple to understand and track. U.S. GAAP figures will be updated over the coming years.
Q:What is the company's position on LTC and dealing with variances under IFRS?
A:The company views itself as the appropriate owner of the LTC block and manages it through rate increases and policyholder options. Variances will always occur, but the operating range of EUR 100 million should cover positive and negative variances on a go-forward basis.
Q:What are the details on downgrades and defaults in the investment portfolio?
A:The movement in ECL showed some transfers between stages, but the impact was relatively small and benign. The asset portfolio is performing well, and the movement in ECL reflects this.
Q:What is driving the U.S. operating profit growth, and how does the U.K. sale process work?
A:U.S. operating profit growth is driven by variances, with positive claims experience and strong CSM progress. The U.K. sale process includes the insurance and platform businesses, with updates expected before the summer. The process details were not disclosed.
Q:What are the trends in net inflows for retirement plans in the U.S., the U.K., and asset management?
A:In the U.S., net outflows are driven by baby boomers retiring and market conditions, but the retirement business is performing well. In the U.K., outflows are due to vertical consolidation and budget concerns. Asset management saw positive third-party flows but outflows from a U.S. high-yield fund and ASR allocation changes.
Q:What is the legal action mentioned in the third paragraph of Page 269, and is it WFG-related?
A:The legal action in the third paragraph is not WFG-related. It pertains to agents being considered independent contractors versus employees. Further details will be provided by IR.
Q:What are the trends in WFG agent productivity and multiticket numbers?
A:WFG has improved productivity through training and field support, with more agents becoming licensed and productive. The agency network has grown stronger and more productive, with higher premium sales per policy.
Q:Review of Unclear Management Responses
A:Management avoided giving direct answers or lacked clarity on the following: 1) The U.K. strategic review sale process details, including whether it is a two-stage process or involves bids for parts of the business. 2) The legal action in the third paragraph of Page 269, as further details were deferred to IR. 3) Specifics on the impact of downgrades and defaults in the investment portfolio, as the response was general and lacked detailed insights.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AIFMC plan
Adviser Platform
Aegon UK
Americas World
Americas business
Americas detail
Brazil life
CEO Friese
CLO warehouse
CSM capital
Capital Markets
Day Slide
Day implementation
Day instance
Day momentum
Day progress
Day review
Director today
EUR result
EUR share
Europe line
Friese CFO
Group track
Markets Day
Platform deposit
Portugal China
SGUL reinsurance
Slide Americas
Slide target
States profitability
UK segment
ambition
dividend EUR
inflow
outflow
plan asset
pricing
scheme
term capital
AEG Transcript
Aegon Ltd. (AEG) Q4 2025 Earnings Call Transcript
Positive2-19
The earnings call summary presents a balanced view. Financial performance and product development are strong, with positive mortality variances and high new business strain. Market strategy and shareholder return plans are optimistic, with investments in growth and a focus on IFRS. The Q&A reveals some uncertainties, such as unclear management responses and legal settlements, but overall sentiment remains positive due to strong operational metrics and optimistic guidance.
Aegon Ltd. (AEG) Q2 2025 Earnings Call Transcript
Positive8-21
The earnings call reflects a solid financial performance with increased free cash flow and interim dividends, despite some negative aspects like decreased valuation equity per share. The company announced a share buyback program, which is typically seen positively. The Q&A did not reveal significant concerns, and management's confidence in achieving targets further supports a positive outlook. The market cap is not available, but the overall sentiment leans towards a positive reaction, likely resulting in a stock price increase of 2% to 8%.
Aegon N.V. (NYSE:AEG) Q1 2025 Earnings Call Transcript
Unknown5-20
The financial performance shows some positive aspects, such as increased operating capital generation and a healthy cash capital position. However, significant concerns include net outflows in retirement plans, market volatility impacting financial stability, and regulatory transition risks. The Q&A session highlighted uncertainty in capital return policies and unclear responses on mortality trends and hedging costs. The planned share buyback is positive but overshadowed by broader financial and strategic concerns, leading to a negative sentiment.
Aegon Ltd. (AEG) Q3 2024 Trading Update Call Transcript
Neutral11-15
AEG Report
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