THE HAGUE, The Netherlands,
January 13, 2016 /PRNewswire/ --
Strategy update and 2018 financial targets presented at
Analyst & Investor Conference
New financial targets
- Deliver on return on equity ambition of 10% by 2018
- Reduce annual operating expenses by
EUR 200 million by
2018
Solid capital base allowing for capital return to
shareholders
- Solvency II ratio of ~160%
end-2015, based on approved partial internal
model
- EUR 400 million share buyback
program launched today
- Dividend pay-out ratio of 50% of operational free cash flows
after holding costs
- Increase final 2015 dividend per share to EUR 0.13
Strategic priorities
- Focus on growing fee businesses and expanding
in asset management
- Restructure US operations into one, functionally-organized
business
- Explore options for UK annuity book
- Implement accounting policy changes with
estimated impact on shareholders' equity of
EUR 1.3 billion to align accounting policies with
inforce management
Aegon CEO Alex Wynaendts, CFO
Darryl Button and Aegon's senior
management will detail their plans to increase profitability and
return of capital to shareholders at Aegon's Analyst & Investor
Conference in London.
"Today, we are announcing a number of significant measures to
improve the operational performance of the company," said Alex
Wynaendts. "I am pleased that we have a strong Solvency II capital
ratio of 160%, which is in the upper-end of our target range of
140-170%. This allows us to launch a EUR 400
million share buyback program today and announce a 9%
increase in the dividend for the full year of 2015. I am confident
that delivering on our strategy to grow our business profitably,
reduce expenses, and return capital to shareholders will enable us
to achieve a 10% return on equity in 2018."
Financial targets
Aegon is focused on return on equity as one of its key
performance indicators and management is committed to delivering
attractive returns to shareholders. The company targets a group
return on equity of 10% by 2018 supported by:
- Reducing annual operating expenses by EUR 200 million
by the end of 2018
- Additional investments in digital capabilities and expertise of
EUR 50 million per annum above the
current level to further support the organic growth of the
business
- Aligning accounting policies with inforce management,
specifically related to UK deferred acquisition costs and
accounting for reinsurance contracts as part of business exits. The
retrospective adoption of these accounting changes as of
January 1, 2016, is expected to
- decrease shareholders' equity by EUR 1.3
billion
- increase underlying earnings before tax by approximately
EUR 20 million in 2016
Capital and cashflow
Aegon's solid capital position and cash flow generation provide
the foundation to accelerate capital returns to shareholders.
Today's main announcements on capital and cashflow are:
- Group Solvency II ratio as of December
31, 2015, of ~160% - in the upper-end of the 140-170%
target range
- Regulatory approval received to use the partial internal model
in calculating Solvency II capital
- Cumulative free cash flows after holding expenses of
EUR 3.0 billion until 2018 - Dutch
and UK operations expected to resume dividend payments in 2016 and
2017 respectively
- Capital returns to shareholders of over EUR 2 billion in the period 2016-2018
- dividend pay-out ratio of 50% of free cash flows by 2018
- EUR 400 million share buyback to
be launched today
- Proposal to increase the 2015 final dividend per share to
EUR 0.13 bringing the total 2015
dividend per share to EUR 0.25, a 9%
increase over the 2014 dividend
Execution of strategy
Aegon's strategic agenda includes the following key steps to
improve performance:
- Leverage leadership positions in key retirement markets as a
provider of thousands of institutional pension plans, and turn
these into millions of retail customer relationships
- Continue to invest in digital capabilities to obtain one view
of the customer and enable the company to provide relevant and
timely information, guidance and advice to customers
- Restructure US operations from a business lines orientation
into one, functionally-organized business to get closer to
customers
- Implement the outcome of the strategic review of Aegon's
businesses in the UK; explore options for the annuity book, and
continue the growth of the successful platform
- Add functions of Chief Technology Officer, CEO of Aegon Asset
Management, Global HR Director and General Counsel to the
Management Board, reflecting the company's key strategic
priorities
Share buyback program details
Aegon will repurchase EUR 400
million worth of common shares in 2016, of which a first
tranche of EUR 200 million will be
repurchased before March 31, 2016.
These shares will be repurchased to neutralize the dilutive effect
of the cancellation of the preferred shares in 2013. The
transactions will commence today, January
13, 2016. It will be proposed to shareholders at their next
Annual General Meeting on May 20,
2016, to cancel any repurchased shares under this program.
The shares will be repurchased at or below the daily
volume-weighted average price. Weekly updates regarding the
transactions will be available on aegon.com/sharebuyback.
Presentations
The keynote presentations by Aegon's CEO and CFO will be audio
webcast at 9.45 am CET on aegon.com.
All other presentations will also be available as of 8 am CET on the company's website.
DISCLAIMERS
Forward-looking statements
The 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, 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 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 private
sector securities and the resulting decline in the value of
sovereign exposure that Aegon holds;
- Changes in the performance of Aegon's investment portfolio and
decline in ratings of Aegon's counterparties;
- Consequences of a potential (partial) break-up of the euro or
the potential exit of the United
Kingdom from the European Union;
- 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;
- Reinsurers to whom Aegon has ceded significant underwriting
risks may fail to meet their obligations;
- 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;
- Changes in laws and regulations, particularly those affecting
Aegon's operations' ability to hire and retain key personnel, 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).
- Changes in customer behavior and public opinion in general
related to, among other things, the type of products also Aegon
sells, including legal, regulatory or commercial necessity to meet
changing customer expectations;
- Acts of God, acts of terrorism, acts of war and pandemics;
- Changes in the policies of central banks and/or
governments;
- 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 premium writings, 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;
- Litigation or regulatory action that could require Aegon to pay
significant damages or change the way Aegon does business;
- As Aegon's operations support complex transactions and are
highly dependent on the proper functioning of information
technology, a computer system failure or security breach may
disrupt Aegon's business, damage its reputation and adversely
affect its results of operations, financial condition and cash
flows;
- Customer responsiveness to both new products and distribution
channels;
- Competitive, legal, regulatory, or tax changes that affect
profitability, the distribution cost of or demand for Aegon's
products;
- 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 and
shareholders' equity;
- 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;
- Catastrophic events, either manmade or by nature, could result
in material losses and significantly interrupt Aegon's business;
and
- Aegon's failure to achieve anticipated levels of earnings or
operational efficiencies as well as other cost saving and excess
capital and leverage ratio management initiatives.
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.
Aegon's roots go back more than 170 years - to the first half of
the nineteenth century. Since then, Aegon has grown into an
international company, with businesses in more than 20 countries 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: aegon.com.
Media relations
Debora de Laaf
+31(0)70-344-8730
gcc@aegon.com
Investor relations
Willem van den Berg
+31(0)70-344-8405
ir@aegon.com
SOURCE Aegon N.V.