The Hague, October 27, 2022 - Agreement marks pivotal
step towards Aegon’s ambition to
build leaders in chosen markets
- Combination creates a leader in the Dutch pension, life, and
non-life insurance markets
- Clear and compelling strategic and financial rationale, with
significant synergies and long-term benefits for customers,
business partners, employees, and shareholders
- Aegon to receive a 29.99% strategic shareholding0F1) in a.s.r.
with associated governance rights and EUR 2.5 billion in
cash proceeds
- Transaction enables Aegon to accelerate its strategy of
releasing capital from mature businesses and to become a leader in
markets where Aegon is well positioned for growth
- Intention to use cash proceeds to return EUR 1.5 billion
capital to shareholders and reduce leverage by up to EUR 700
million consistent with disciplined capital management
approach
- Progress on its transformation allows Aegon to increase its
2023 dividend per share target from around EUR 0.25 to around
EUR 0.30
Aegon announces today it has reached an agreement with a.s.r. to
combine its Dutch pension, life and non-life insurance, banking,
and mortgage origination activities with a.s.r. The combination
will create a leading Dutch insurance company. This step enables
Aegon to accelerate its strategy and represents a major step in its
ambition to become a leader in its chosen markets. Aegon will
receive EUR 2.5 billion in gross cash proceeds, and a 29.99%
strategic stake in a.s.r., with associated governance rights.
Aegon’s Dutch asset management activities will remain part of
Aegon’s global asset manager. Aegon will enter into a long-term
asset management agreement with a.s.r. to manage parts of the
combination’s general account investments, the investments of the
Premium Pension Institution (PPI) offering of Aegon Cappital, and
a.s.r.’s mortgage funds.
“Today’s announcement marks a major milestone in the history of
our company and in our long-term ambition to create leaders in our
chosen markets”, said Lard Friese, CEO of Aegon. “Both Aegon and
a.s.r. are deeply rooted in Dutch society and share a long and rich
history. Thanks to the hard work and dedication of our employees,
Aegon the Netherlands has been able to improve its performance in
recent years. We’re now building on that success by creating a
Dutch insurance leader. I’m convinced that the combination of our
companies is in the best long-term interest of all stakeholders and
Dutch society at large. Customers of both companies will benefit
from a more diversified product offering and strong
distribution.
“This transaction provides a unique opportunity to accelerate
both the return of capital to shareholders and our strategy of
investing in markets where we are well positioned for growth. Our
priority continues to be to further improve our operational
performance and grow profitably. The increased focus and resources
resulting from this transaction, will place us in a better position
for the future growth of the company.”
Jos Baeten, CEO of a.s.r. said: “I am pleased to announce today
that a.s.r. and Aegon the Netherlands, two renowned Dutch
companies, deeply rooted in Dutch society, will create a leader in
Dutch insurance. Together we will form a sustainable, leading
insurer and strengthen our market position as the number two
insurer in the market. Given the joined strength of both companies,
the company will provide a good home for all Aegon the Netherlands
employees, customers, and relations. As employees of a.s.r., we
will work with the new colleagues on the future of this
combination. The starting point will be, one company, one culture,
by leveraging the best of both organizations. We look forward to
welcoming all employees, customers, and relations of Aegon the
Netherlands in the near future.”
1 Value of 29.99% stake is EUR 2.4 billion based on the closing
price of a.s.r.’s shares on October 26, 2022 and 57 million shares
to be received by Aegon upon closing of the transaction before any
potential equity offering by a.s.r. as part of the funding of the
transaction.
Compelling strategic rationale Combining
the two companies will result in a strong well-diversified Dutch
insurance company that will be able to deliver a broad range of
attractive products and services and generate attractive
shareholder returns.
The combined group will:
- have a leading position in the Dutch pension market. This will
lead to more attractive value propositions to customers as the
company is well placed to capture opportunities from the upcoming
pension reform;
- become the market leader in disability insurance and the number
three player in property and casualty insurance, facilitating a
more competitive product offering;
- have enhanced scale in the origination and servicing of Dutch
mortgages, creating the opportunity for more streamlined and
improved operations;
- have stronger distribution activities by combining Aegon’s and
a.s.r.’s expertise, resources, and platforms in this
area; and
- deliver significant synergies through the integration of the
closed individual life portfolios of the two companies into one
platform.
The combination will be well positioned to further extend its
role in the Dutch insurance market in the field of sustainability
and ESG and contribute to finding solutions to the main challenges
society faces that have a clear relationship with the core
activities of the new combination.
Combining the two companies is expected to lead to substantial
cost synergies and diversification benefits. Aegon will benefit
from a.s.r.’s improved operating capital generation and capital
synergies through its 29.99% stake in the company. Aegon will bring
to a.s.r. significant risk management capabilities and accelerate
the implementation of a Partial Internal Model for the calculation
of the Solvency II required capital of the combination.
Leveraging Aegon Asset
Management’s capabilities Aegon has agreed an
exclusive long-term partnership with a.s.r. to manage the illiquid
investments that are part of the general account of the combined
businesses. In addition, it will continue to be the asset manager
for the investments of Aegon Cappital’s PPI proposition and will
take over the management of a.s.r.’s mortgage funds.
Through these steps, Aegon Asset Management will further strengthen
its position as a provider in the Dutch market of fiduciary
services, retirement multi-assets & solutions, fixed income,
including alternative fixed income investments and responsible
investing.
Governance of combination Aegon N.V. will
be a 29.99% strategic, supportive shareholder in a.s.r., allowing
Aegon to participate in the financial benefits that the combination
will bring. Furthermore, Aegon will have the right to nominate two
candidates for the a.s.r. Supervisory Board. Lard Friese, CEO of
Aegon N.V will be nominated as a non-independent member, and
Danielle Jansen Heijtmajer, Chair of the Supervisory Board of Aegon
the Netherlands, will be nominated as an independent member of the
Supervisory Board of a.s.r.. The non-independent member has an
affirmative vote within a.s.r.’s Supervisory Board on certain
topics, in line with the size of Aegon’s shareholding.
Integration and organization of
companies The activities of a.s.r. and Aegon the
Netherlands will be integrated after closing of the transaction to
maximize the potential of the two businesses and fully benefit from
their combined reach, scale, and resources. The integration is
expected to impact employees in both companies. The integration
will be largely completed within three years, and the intention is
to minimize the number of redundancies through natural attrition
and by helping people to the greatest extent possible to find jobs
either inside or outside of the combination. The process will be
executed in a fair, diligent, and open way, respecting the talents
and strengths of people in both organizations. Employees of the
combination will benefit from the sharing of best practices
and greater long-term career opportunities within a
larger, more diversified Dutch company.
The a.s.r. brand will be the leading brand of the combination.
The Aegon brand will remain in use in the pension and mortgage
markets for three years after closing of the transaction. There
will be no change for the brands of Aegon’s other entities,
including TKP, Knab, Robidus and Nedasco.
Accelerating transformation The transaction
represents a major step in the transformation of Aegon, building on
the successful execution of the strategy outlined at the Capital
Markets Day of December 2020 to create leaders in chosen markets.
The transaction forms a leader in the Dutch insurance market and
enables Aegon to increase its focus on creating advantaged
businesses in chosen markets outside the Netherlands.
In the US, Aegon will build upon Transamerica’s leading
positions in both individual life insurance solutions and the
workplace pension business, investing capital to profitably grow
its market share in selected product lines. Additionally,
Transamerica will continue to take management actions designed to
further improve the risk-return profile of the business. In the UK,
Aegon’s ambition is to continue to profitably grow both the Retail
and Workplace channels of its leading platform business by
improving its customer propositions, service capabilities and
digital experience for advisors, employers, and customers. The
transaction allows Aegon Asset Management to strengthen its
position in retirement-related investment solutions,
alternative fixed income investments and responsible investing, and
to build leadership in these areas. In its growth markets, Aegon
will continue to look to invest capital in value-added growth
opportunities. More details will be shared on the plans to
profitably grow the strategic businesses in Aegon’s core markets,
its growth markets, and its global asset manager at a Capital
Markets Day in the second quarter of 2023.
Use of proceeds and financial
implications Aegon anticipates that it will
return EUR 1.5 billion of the cash proceeds to shareholders,
barring unforeseen circumstances, to offset the dilutive effect of
the transaction on free cash flow per share. Furthermore, the
company intends to reduce its gross financial leverage by up to EUR
700 million.
A priority for Aegon moving forward is to drive sustainable,
profitable growth for Transamerica and to execute upon additional
in-force management actions designed to improve the risk-return
profile of the business. It is anticipated that this will require
funding and therefore Aegon expects to maintain its Cash Capital at
the Holding above the middle of the operating range of EUR 0.5
billion to EUR 1.5 billion in the near term. Surplus Cash Capital
at the Holding above the operating range will be subject to
continued disciplined capital management, whereby capital that is
not used for value-added growth opportunities will be returned to
shareholders over time.
Update on financial targets; increase in dividend per
share On completion of the transaction, Aegon
will replace its full ownership of the cash flow and profits of its
Dutch businesses with its 29.99% strategic stake in a.s.r.. In the
near term, this is expected to translate into lower free cash flow,
improving over time as synergies emerge from the combination. On
completion of the capital return to shareholders and realization of
the synergies, Aegon anticipates that its free cash flow on a per
share basis will be higher than pre-transaction levels.
The progress that Aegon has made on its transformation allows
the company to increase its pay-out ratio and rebase the targeted
dividend per share over 2023 from the current level of around 25
eurocents to around 30 eurocents.
All other financial targets will be updated in due
course.
The transaction is expected to reduce IFRS shareholders’ equity
by EUR 3.3 billion based on the balance sheet position on June 30,
2022. This includes the impact from the settlement of a tax
position at closing of the transaction, which is not anticipated to
have a material impact on Aegon’s Cash Capital at the
Holding.
Group supervision
implications Aegon will engage with its
college of supervisors on the implications for group supervision
upon closing of the intended transaction. Regardless of the
outcome, Aegon intends to maintain its head office in the
Netherlands. Its shares will remain listed on Euronext in Amsterdam
and the New York Stock Exchange.
Indicative timelines The closing of the
transaction is subject to customary conditions, including
regulatory and antitrust approvals, shareholder approvals, and the
completion of the works council consultation processes of both
Aegon and a.s.r..
Aegon will convene an Extraordinary General Meeting of
Shareholders (EGM) and request approval for the proposed
combination between Aegon the Netherlands and a.s.r.. The EGM is
expected to be held on January 18, 2023. The Board of the
Association Aegon has been informed of Aegon’s ambition to
accelerate its strategy and the proposed combination with a.s.r..
The Board is supportive and will seek the approval from its members
for its support.
Based on the required steps, and necessary approvals, the
transaction is expected to close in the second half
of 2023.
About Aegon
Aegon is an integrated, diversified, international financial
services group. The company offers investment, protection, and
retirement solutions, with a strategic focus on three core markets
(the United States, the United Kingdom, and the Netherlands), three
growth markets (Spain & Portugal, Brazil, and China), and one
global asset manager. Aegon's purpose of Helping people live their
best lives runs through all its activities. As a leading global
investor and employer, the company seeks to have a positive impact
by addressing critical environmental and societal issues, with a
focus on climate change and inclusion & diversity. Aegon is
headquartered in The Hague, the Netherlands, and listed on Euronext
Amsterdam and the New York Stock Exchange. More information can be
found at aegon.com.
About a.s.r.
a.s.r. Nederland N.V. ranks among the top 3 insurers in the
Netherlands. a.s.r. offers products and services in the fields of
insurance, pensions and mortgages for consumers, self-employed
persons, and employers. In addition, a.s.r. is active as an asset
manager for third parties. a.s.r. is listed on Euronext Amsterdam
and included in the AMX Index. For further information please visit
www.asrnl.com.
Additional information
Conference call analysts and
investors
Today, at 10:00 a.m. CET, Aegon’s management will host a
conference call for analysts and investors. The conference call and
Q&A can be followed via a live audio webcast on aegon.com. A
replay will be available as soon as possible after the conference
call on aegon.com.
To join the conference call, you will need to register via the
following registration link. Directly after registration you
will receive an email with the call details and a personal pin to
enter the conference call. Call detailsNL: + 31 20 795
2755UK: + 44 20 8610 3526US: + 1 646 307 1951Passcode: you
will receive a personal pin upon registration
Joint digital press conference
Today at 08:00 hrs. CET, Lard Friese, CEO of Aegon N.V., and Jos
Baeten, CEO van a.s.r. will host a joint digital press conference.
Please, follow this link to join the press conference.
Contacts |
|
Media
relations |
Investor
relations |
Carolien van der
Giessen |
Jan Willem
Weidema |
+31 (0)6 11 95 33
67 |
+31(0) 70 344
8028 |
carolien.vandergiessen@aegon.com |
janwillem.weidema@aegon.com |
|
|
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, could, is confident, will, and similar
expressions as they relate to Aegon. These statements may contain
information about financial prospects, economic conditions and
trends and involve risks and uncertainties. In addition, any
statements that refer to sustainability, environmental and social
targets, commitments, goals, efforts and expectations and other
events or circumstances that are partially dependent on future
events are forward-looking statements. These statements are not
guarantees of future performance and involve risks, uncertainties
and assumptions that are difficult to predict. Aegon undertakes no
obligation, and expressly disclaims any duty, 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 and adversely 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:
- Unexpected delays, difficulties, and expenses in executing
against our environmental, climate, diversity and inclusion or
other “ESG” targets, goals and commitments, and changes in laws or
regulations affecting us, such as changes in data privacy,
environmental, safety and health laws;
- Changes in general economic and/or governmental conditions,
particularly in the United States, the Netherlands and the United
Kingdom;
- Civil unrest, (geo-) political tensions, military action or
other instability in a country or geographic region;
- 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;
- 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.
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