Full Year 2024 Aegon Ltd Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: David Barma - BofA Global Research - Analyst : Thanks for taking my question. Can we start with the operating capital generation, please? And could you help me understand the moving parts leading you to reiterate your 2025 guidance? So maybe if you can run through the main building blocks and the offsetting factors to the pressure you're seeing in China?

Question: David Barma - BofA Global Research - Analyst : Thank you. And what kind of interest rate benefits are you modeling there? I think you said at Q3, you were reinvesting 130 basis points higher than your back book yield. That's now probably 200. So how does that fit into the equation?

Question: David Barma - BofA Global Research - Analyst : Understood. And my second question is on the big increase in the equity sensitivity of the RBC ratio. Are there any measures that can be taken to manage this or is it just dependent on the level of equity markets, so basically markets to go down or is there anything on the hedging that can be done to change the flooring level?

Question: David Barma - BofA Global Research - Analyst : Understood. Thank you.

Question: Michael Huttner - Berenberg - Analyst : I've got two quick, I'll do one at a time. So China solvency, can you say what the solvency is now and what it would be if you -- once you've amortized -- if you were to apply spot interest rates rather than the kind of smooth curve? What I'm really asking is there -- what is the risk that you have to inject capital in China? And then I have another question on mortality.

Question: Michael Huttner - Berenberg - Analyst : Sure. On the mortality, so I'm hopeful that all these drugs that are coming through and the peaking of maybe mortality due to (inaudible) and other stuff should mean that mortality going forward in the US will improve? And I'm just wondering what metrics should I use to kind of try and gauge whether how much a benefit or the relative to expectations could be? You just mentioned the face value figure for Universal Life of 47 billion, but my memory of mortality exposure was higher. So I just wonder if you can help me on these moving parts.

Question: Michael Huttner - Berenberg - Analyst : Thank you.

Question: Farooq Hanif - JPMorgan - Analyst : Two questions. I'm just going to start with international. The return on capital in international just seems really weak compared to the rest of the group. And given low interest rates in China, given perhaps the market possibly doesn't sort of really look at the business in a lot of detail. It gives you a lot of value for it. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 20, 2025 / 8:00AM, AEGN.AS - Full Year 2024 Aegon Ltd Earnings Call What can you say about potential disposals or looking at restructuring that business going forward now that, obviously, a lot of your US restructuring and transformation is kind of in the bag and it's just running. I mean is that the next area that you think you might turn to? That's question one, and then I'll wait for a question two when you answer that.

Question: Farooq Hanif - JPMorgan - Analyst : Yes. So going to earnings -- the IFRS earnings. So obviously, the onerous contracts in the US have been a negative surprise. And I think there was a feeling the last time you spoke to us that you surprises would go away, especially around mortality, it's kind of come out of the blue. So there are two parts to my second question. So firstly, is there anything else that you're looking at in your accounting and the way that you do it, given that it's a new framework that we need to be aware of? And secondly, when I look at the buckets that contributes to those onerous contract, it seems that two out of the three are probably going to continue. Obviously, one is offset at the holding. But what about the premium variances in universal life, if you could just explain that and what you can do about that?

Question: Farooq Hanif - JPMorgan - Analyst : Okay. Got it. Thank you very much.

Question: Rhea Shah - Deutsche Bank - Analyst : Two questions, but I'll start with the first one. So in terms of the UK business, I mean strong [workplace] flows in 2024. What are your expectations for this into 2025? Do you still expect to see growth in this number? And then I'll move on to the second question after that. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 20, 2025 / 8:00AM, AEGN.AS - Full Year 2024 Aegon Ltd Earnings Call

Question: Rhea Shah - Deutsche Bank - Analyst : And then my second question is just looking at the IFRS result going from operating to net. The restructuring charges related to US investments, is this a good run rate to use the numbers seen in the second half of the year?

Question: Rhea Shah - Deutsche Bank - Analyst : Okay. Thank you.

Question: Nasib Ahmed - UBS - Analyst : Thanks for taking my question. So firstly, on the financial assets, I think you've got a target of getting the capital consumed or capital deployed in that business to 2.2 billion by '27. There's no additional management actions today. What's the pipeline looking like? How are you going to get down to 2.2 billion? So there's another 1 billion-odd to go from where you are at the moment? So yeah, that's my first question. I'll ask the second one later.

Question: Nasib Ahmed - UBS - Analyst : I guess a follow up to that one is, do you need a transaction to get to -- sorry, not a transaction -- a bilateral reinsurance or something like that to get to the 2.2, or can you kind of just get it down through runoff? So I'll ask the second question. So in terms of kind of -- its related in terms of the deals that you're seeing, particularly on retirement plans, I think [Voya] did a deal as well. Is that an area where you could potentially look to build up scale because it's a fee-based business, its scale will give you operating leverage. Is that where you would look to acquire something?

Question: Nasib Ahmed - UBS - Analyst : Thank you.

Question: Marcus Rivaldi - Jefferies - Analyst : Can you -- away from, I guess, the results today, but any update you can provide on discussions you're having with the BMA around the long-term regulatory capital value through outstanding securities. I'm thinking particularly of the about EUR1.4 billion of Solvency II grandfathered debt that's due to lose regulatory capital value in Bermuda at the end of the year?

Question: Marcus Rivaldi - Jefferies - Analyst : Okay. Thank you.

Question: Steven Haywood - HSBC - Analyst : Two questions. Obviously, there was quite a negative net impairments on the IFRS profit line. But obviously -- and you do it on an ECL basis now in line with the rules. Can you give us an indication of how conservative this is? What's the likelihood of these ECLs materializing as actual impairments? And my second question is more of a statement, I guess. It's -- if you look at your RBC sensitivities, they're showing that no matter what equity market moves up or down or whatever interest rate move up or down you have, it is negative on the RBC how can you sort of give this better information on an economic basis to us?

Question: Steven Haywood - HSBC - Analyst : Thank you. Very comprehensive.

Question: Michael Huttner - Berenberg - Analyst : I have two, and they're both about 2025. So 1.2 billion, does it -- can you talk a little bit about moving parts. I think you've got a sensitivity on the in America 40 million in the group of 60 million if the equity market goes up 10%. So I'm just asking, have you included that because equity markets up a lot? And then the second is a similar calculation on the free cash flow. So you beat on free cash flow in 2024 partly because they bought back some shares. And the 800 million, do you include in that the ASR buyback they announced yesterday, the 125 million, which (inaudible) indicated at the Capital Markets Day. Any help on the moving parts, please?

Question: Michael Huttner - Berenberg - Analyst : Thank you.