- Net loss of EUR 348 million due to one-time charges and a non-economic loss on interest rate hedges in the US
- Operating result of EUR 538 million; a decrease of 11% on a constant currency basis compared with the second quarter of 2021. Benefits from expense savings, growth initiatives and favorable claims experience are more than offset by lower fees due to adverse market movements and lower investment income
- The capital ratios of all three main units remain above their respective operating levels. Group Solvency II ratio increases to 214% driven by management actions and the benefit from model updates
- Cash Capital at the Holding decreases only slightly to EUR 1.7 billion at June 30, 2022, despite the impact of the previously announced deleveraging and share buyback; third tranche buyback to commence in October 2022
- 2022 interim dividend increases by EUR 0.03 to EUR 0.11 per common share reflecting sustainable free cash flow growth
- Aegon raises its 2022 guidance for operating capital generation from the units from around EUR 1.2 billion to around EUR 1.4 billion. Aegon also expects to achieve cumulative free cash flow over the period 2021 to 2023 of at least EUR 2.2 billion, well ahead of the EUR 1.4 to 1.6 billion target set at the 2020 Capital Markets Day
Statement of Lard Friese, CEO
Our second quarter operating result of EUR 538 million was strong, reflecting the receding impact of COVID-19 and the progress we are making on our operational improvement plan that helped offset the impact from lower equity markets. We have now executed 1,058 out of more than 1,200 initiatives as part of this plan. Expense initiatives resulted in a EUR 250 million reduction of annual addressable expenses. Across our three core markets, our Workplace Solutions businesses generated positive net deposits, supported by various growth initiatives and favorable labor market conditions. We also achieved growth in new life sales in the US, supported by a 12% increase in licensed life agents at WFG over the last year. Mortgage origination volumes in the Netherlands, net deposits in the Retail channel in the UK, and third-party net deposits in our asset management business were down versus last year, reflecting a challenging macro‑economic outlook and rising interest rates.
Our net result was impacted by a one-time charge related to reinsurance rate increases in the US, contributing to the net loss of EUR 348 million for the quarter. Nonetheless, we remain on course to deliver on our objective of growing returns to shareholders. The actions we have taken to strengthen our capital position and improve our risk profile are paying off in the current market circumstances, with the capital position of our three main units remaining above their respective operating levels. The strength of our balance sheet and the sustainable growth in free cash flow are a solid basis to raise the interim dividend by 3 eurocents compared with last year to 11 eurocents per common share.
In the second quarter we also continued to make progress in our approach on sustainability. In the United States we introduced the Emergency Savings Account product enabling employers to help their employees save for unexpected events and improve their financial wellbeing. As part of our commitment to contribute to a climate neutral world, Aegon Asset Management partnered in the launch of a USD 600 million venture in the US to acquire value-add multifamily dwellings and transition them to low-carbon, energy efficient buildings. In the UK, we moved over GBP 3 billion of customers’ assets into strategies that consider ESG credentials, as part of the commitment to make our default pension funds in the UK carbon net-zero by 2050.
Looking ahead, considering the active management of our balance sheet and our overall transformation progress, we are comfortable increasing our expectations for cumulative free cash flow over the period 2021 to 2023 from EUR 1.4 to 1.6 billion to at least EUR 2.2 billion. We also raise our 2022 guidance for operating capital generation from the units from around EUR 1.2 billion to around EUR 1.4 billion.
While uncertainty in financial markets and economic outlook is expected to remain, we will continue to stand by our customers and help them navigate through challenging economic circumstances with our expertise and high level of service. I want to thank our colleagues for their continued dedication and I am confident that together we will deliver on our 2023 strategic and financial commitments.”
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