The Hague – October 27, 2022
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
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
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.
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..