Q3 2024 Aegon Ltd Trading Statement Call Transcript

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

Question: Farooq Hanif - JPMorgan - Analyst : Hi, everybody. Good morning. Thank you very much. My first question is on US macro. So given the move in yields, the change in climate, how does that change your view on organic versus inorganic measures to reduce capital employed in US financial assets? That's question one. I'll let you answer that first.

Question: Farooq Hanif - JPMorgan - Analyst : Okay. Thank you very much. And my second question was, I know that OCG and IFRS have different kind of ways of dealing with mortality experience. So you have a mildly positive mortality/morbidity experience variant in OCG, how should we think about translating that into an IFRS world, particularly given the big reserve charge that you took? From what you've seen in 3Q, is that anything you can say quantitatively about what to expect about the impact of that reserve charge and the experience that you're seeing?

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

Question: Nasib Ahmed - UBS Equities - Analyst : Good morning. Thanks for taking my questions. Firstly, on the criteria for capital returns versus value-creating opportunities. Are you able to kind of flesh out the framework a little bit more in terms of how we should think about that? I'm thinking more like on life business organically, you generate 12% of IRRs, are we kind of looking at that hurdle rate? If your yield is higher than that, there's going to be incremental buyback or a free cash flow multiple of 11 times, 12 times that you're trading at? Can you kind of give some numbers around that?

Question: Nasib Ahmed - UBS Equities - Analyst : Perfect. Thank you. That's clear. Second question on -- kind of related to the government changes in the US Let's talk about deregulation. I remember, I think, there was some talk around the Q1 results on regulation around distribution of insurance products and advisers. Any comment on where WFG stands around that regulation and forward-looking as well with the new government in?

Question: Nasib Ahmed - UBS Equities - Analyst : Sorry, just a quick one. Do we have a line for when we can draw a line under from the judges or...

Question: Michael Huttner - Berenberg - Analyst : I had three questions, but trying to wrap them in two, so I'll cheat a bit. On the buyback, sorry, the reduction to EUR1 billion by end 2026. I see from your lovely consensus sheet the figure at the end of 2024 is EUR1.6 billion, and the consensus was roughly right about -- landed in Q3, so that's about right. So could you walk me through what -- from EUR1.6 billion to EUR1 billion, does that imply just EUR600 million buyback? Is my -- is the math that simple as the other moving parts? And then on the light to that, if I may. The EUR150 million, I was really curious -- what you're doing. Just curious how much of that is for the IC. And then the -- I think I wanted to ask a little bit more on forecast, which was the flexibility to accelerate the reduction in capital allocated to fixed financial assets. And I just wondered if you could just remind us the big numbers, how much capital and how much assets is in financial, is in universal life and in available annuities and in long-term care? The feeling I have is the one the market would welcome eroded be available annuities, but I don't know. Thank you.

Question: Michael Huttner - Berenberg - Analyst : Super. Very helpful. Thank you. And I just hope for you, but we've aligned interest that the 40 if gets multiplied over the next years. Thank you.

Question: Benoit Petrarque - Kepler Cheuvreux - Analyst : Yes. Good morning. So the first one is on OCG, maybe kind of try to give a preliminary view on '25 looking at, well, especially US macro interest rates and current equity market. So your run rate is about EUR1.2 billion on a clean basis today, what do you expect? I know you have not changed your guidance of EUR1.2 billion, but I know that will be appreciated. And also on the free cash flow for EUR25 million of EUR800 million, does your strong OCG 2024 change something to that level? And then on the buyback, so EUR110 million ex share-based compensation, is that a final figure for H1? Or could you update us at a later stage in H1 on the buyback based on maybe a more accurate cash figure at year-end? Thank you.

Question: Farquhar Murray - Autonomous Research - Analyst : Good morning, all. Just two questions, if I may. Firstly, just with regards to WFG, I just wondered if you could explain the fall in the proportion of multiticket agents there, is that due to a particularly large inflow of unseasoned agents that you would be hoping to convert later and perhaps what's the nature of that activation program you're working through? And then coming back a little bit to Benoit's question there, can I just ask how you framed the EUR150 million buyback announced today, I'm just wondering if that could maybe give us a bit of a sense of how to think about things going forward. Because obviously, at the moment, it probably wouldn't be sufficient to reach the EUR1 billion target by end '26? Thanks.

Question: Farquhar Murray - Autonomous Research - Analyst : That's actually quite helpful. I mean maybe just philosophically, should I then look at the EUR150 million as perhaps a kind of prudent base level that you might then supplement periodically going forward?

Question: Farquhar Murray - Autonomous Research - Analyst : Okay. That's actually really helpful. Much appreciated. Thanks.

Question: Iain Pearce - BNP Paribas Exane - Analyst : Hi. Good morning, everybody. The first one was just around the new business in the US and the WFG agent selling less of your own product. Just if you could give a bit more detail around sort of where you're seeing more product demand for the pockets that Transamerica isn't selling, and why you're thinking you're seeing that in this quarter versus the other quarters and if that's sort of a reflection of the macro environment? So just thinking about new business developments going forward, that would be interesting, please. And then the second one was just on the cash, again, sorry. I think it's -- I guess what would be useful is just clarification around the word gradually in how you expect to run the cash down to the 1 billion. So should we be thinking it's a relatively straight line from 1.6 at year-end to 1.3 next year and 1 the year-end afterwards. Do you view that as sort of being higher at year-end '25 and then seeing where you are in '26?

Question: Iain Pearce - BNP Paribas Exane - Analyst : Perfect. If I could just come back on the new business question. It was mainly fixed index annuity that you were seeing that increased demand for, and that's what led to the lower proportion of WFG?

Question: Iain Pearce - BNP Paribas Exane - Analyst : Understood. Perfect. Thank you.

Question: David Barma - BofA Global Research - Analyst : Good morning. Thanks for taking my questions. Firstly, coming back on the on the holding cash, sorry, Duncan to ask again, but maybe I can ask this slightly differently and more. How did you decide on the sort of two-year period rather than acting on this now? You've been talking about it for more than 1.5 years. So why this two-year additional period? So can I infer from that, that the balance between capital return and M&A is tilted a bit more to the latter for this part of the remaining excess cash? That's my first question. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 15, 2024 / 8:00AM, AEGN.AS - Q3 2024 Aegon Ltd Trading Statement Call And then secondly, on -- coming back on your answer regarding '25 OCG. I would have thought that higher equities, the universal life buyout program, underlying business growth, maybe even higher reinvestment rates would take you quite a bit above your guidance. You seem to suggest new business strain is the main variable here that we're missing. Are you able to give us some guidance on the level of new business trend you expect next year? And then lastly, on the retirement plans in the US where you've had structural outflows in the part, excluding mid-market for some time. And as you've pointed out, the mid-market has been volatile to. Can you give us some color or some context on how competitive you think Transamerica is in that space right now? And what still needs to happen to fix the flows?

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

Question: Jason Kalamboussis - ING FM - Analyst : Yes. Hi. The first thing is a very helpful explanation of the retirement plan. Just is it possible to know what the third quarter net deposits would have been without these two large plans and also so that we get an idea a bit how the rest is doing? And if also are there a lot -- if you give us an idea also in the midsize plans, which is the percentage of this kind of like large, low margins, that well will help us to know if we could see -- even if we understand it's lumpy, we could see some more large one-offs in various quarters. The second question is on the -- do I hear on the possible inorganic views you have. Should I understand that you're moving away from probably just bolt-ons to possibly larger deals? So are you looking at things that could be more, if not transformational at least larger. I would be listed to know since you also specifically say that the share buybacks could come if you do not find a usage in organic or inorganic opportunities. And clearly, inorganic are more likely to take the chunk of it. And the third, a bit related question to the second one is we haven't heard much about the ASR stake. And I'm just trying to understand your thinking there. Because you haven't even reduced a bit [this stage] to give at least essential direction. And this is effectively a bit of a loop. So it is -- you say that you would like to see a higher valuation, but effectively, you're a bit hurting that valuation, but not at least reducing a bit the stake. So again, I would like to have your thoughts on 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. NOVEMBER 15, 2024 / 8:00AM, AEGN.AS - Q3 2024 Aegon Ltd Trading Statement Call

Question: Jason Kalamboussis - ING FM - Analyst : Just a follow-up on the retirement. Are there a lot of such plans that do not make use of your ancillary services? If you cannot quantify, at least give an idea if it is relatively large or not.

Question: Jason Kalamboussis - ING FM - Analyst : Very good. Thank you very much for your explanations. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 15, 2024 / 8:00AM, AEGN.AS - Q3 2024 Aegon Ltd Trading Statement Call