Steady progress on strategic priorities and financial targets supports increase in dividend
Net result of EUR 849 million in the second quarter of 2021 reflects strong operating result and fair value gains on investments from favorable market movements
All segments contribute to the increase of the operating result by 62% compared with the second quarter of 2020 to EUR 562 million, driven by expense savings, increased fees due to higher equity markets, and a normalization of claims experience in the United States
Cash Capital at Holding increases to EUR 1.4 billion, and remains in the upper half of Aegon’s operating range. Capital ratios of all three main units are above their respective operating levels; Group Solvency II ratio increases by 14%-points to 208%
In the US variable annuity business, Aegon launched a lump-sum buy-out program and will be expanding its dynamic hedging program to release capital and increase the predictability of capital generation
Interim dividend increases by EUR 0.02 to EUR 0.08 per common share to reflect steady progress made on our strategic priorities and financial targets
Statement of Lard Friese, CEO
“I am encouraged by the steady progress we have made on our strategic and financial transformation in the second quarter of 2021. Economic recovery – aided by increased vaccination rates – supported our results.
Increased fees due to favorable equity markets, the normalization of claims experience in the United States, and expense savings contributed to a 62% increase in our operating result to EUR 562 million. We have made good progress on the implementation of our expense savings program, resulting in a EUR 220 million reduction of annual addressable expenses through the second quarter. This strengthens our confidence in our ability to deliver on the targeted EUR 400 million expense saving by 2023.
By introducing innovative new products, expanding distribution, and enhancing customer service we are driving growth in our Strategic Asset category. We achieved double digit sales growth in US Life, delivered another quarter of strong sales in US Middle-Market Retirement Plans, and almost doubled the net deposits in our UK Workplace business. We continued our strong growth momentum in the Netherlands, with record-high levels of both mortgages under administration, and assets under administration in our new-style defined contribution pension business.
Aegon Asset Management also extended its growth track record of positive third-party net deposits, as strong demand for our solutions – both in our wholly-owned business and in our Chinese joint venture – continues. In our ESG portfolio, Aegon Asset Management and its partners have helped to fund investments in affordable and workforce housing units in the United States to better serve our local communities.
In July, we launched a program that offers certain variable annuity customers a lump-sum payment in return for surrendering their policies. The buyout program will reduce Transamerica’s financial market exposure, with the remaining legacy variable annuities portfolio to be dynamically hedged for equity and interest rate risk. This creates value by releasing capital at terms we believe are favorable compared to other alternatives, and increases the predictability of the capital that the business generates.
The progress we are making on our strategic priorities and financial targets provides us with the confidence to accelerate the increase in dividends, on our path to pay around 25 eurocents per common share by 2023. Therefore, we are announcing today an increase in our interim dividend by EUR 0.02 to EUR 0.08 per common share. Furthermore, the strength of our balance sheet also allows us to take another step towards achieving our deleveraging target by announcing the redemption of USD 250 million perpetual capital securities this year.
I would like to thank our 22,000 employees who, in the face of an ongoing pandemic and change, followed through on our strategic and operational plans in the second quarter.”