The Hague October 27, 2022
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 Transamericas 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, Aegons
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 Aegons 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 Aegons 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..
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