Aegon Ltd. (AEG) Q2 2025 Earnings Call Transcript

Aegon Ltd. reported a strong first half 2025, with operating profit up 19% to EUR 845 million, driven by profitable business growth and improved claims experience, while operating capital generation saw a slight 2% decrease to EUR 576 million due to higher new business strain. The company reaffirmed its full-year operating result and OCG guidance, maintaining a robust cash capital position over EUR 2 billion and a 183% solvency ratio. Notably, Aegon increased its interim dividend to EUR 0.19 per share and announced an additional EUR 200 million share buyback, bringing the H2 2025 total to EUR 400 million, underscoring its commitment to shareholder returns. Most significantly, Aegon initiated a review for a potential relocation of its head office and legal domicile to the U.S., aligning with its U.S. operations now comprising 70% of its business, which would involve a multi-year transition to U.S. GAAP reporting and a potential primary NYSE listing, with the review outcome expected by the December 10 Capital Markets Day.

Analysis

Aegon reported a strong first half for 2025, underscored by a 19% year-over-year increase in operating results to EUR 845 million, primarily driven by profitable growth and more favorable claims experience in its U.S. strategic assets. This performance prompted an upgrade in the U.S. operating result guidance by $50 million. While commercial momentum is robust, evidenced by a 13% rise in new U.S. life sales and a near-doubling of RILA net deposits, this growth led to higher new business strain, causing operating capital generation (OCG) to decline by 2% to EUR 576 million. Despite this, the company's capital position remains solid with a cash capital holding of over EUR 2 billion and a 183% solvency ratio, supporting an increased interim dividend of EUR 0.19 per share and an expanded EUR 400 million share buyback for H2 2025. The most significant development is the strategic review to potentially relocate the head office and legal domicile to the U.S., a logical step given that the region now accounts for 70% of operations. This move, which would involve a multi-year transition to U.S. GAAP and a potential primary listing on the NYSE, aims to simplify the corporate structure and align it with its core market, with a final decision expected at the December 10 Capital Markets Day.

Key Decisions for Investors

• Investors should closely monitor the outcome of the U.S. head office relocation review, to be announced on December 10, as a move would fundamentally realign the company's regulatory, accounting, and valuation framework with its primary market.
• The increased dividend and EUR 400 million H2 buyback underscore a firm commitment to capital returns, making shareholder yield a key component of the investment thesis, supported by a EUR 2 billion cash position.
• Consider the trade-off between strong top-line growth, evidenced by rising U.S. life sales and net deposits, and the associated near-term pressure on operating capital generation from new business strain.
• Acknowledge the positive de-risking of the U.S. variable annuity block through new hedging, which reduces equity market sensitivity and enhances the stability of runoff earnings, even at the cost of a minor drag on OCG.