Read CEO Lard Friese's letter published in Aegon's Integrated Annual Report 2021.
The past year has been challenging in many ways, particularly as the ongoing COVID-19 pandemic has lasted longer than many people may have anticipated.
As a company, we are adjusting to this new reality, while also dealing with other far-reaching changes taking place around us. Looking back and reflecting on an eventful 12 months, I am pleased with the progress we have made together in difficult circumstances.
In 2021, my first full year as Chief Executive Officer of Aegon, our focus remained on creating value for our different stakeholder groups. To our shareholders and wider investor community, in particular, I am pleased to report clear headway with executing our new strategy. We have been working to build a more enduring, high-performance company, with a focus on three core markets, three growth markets, and one global asset manager. To realize our goals, we have been fully engaged in implementing a rigorous company-wide transformation program aimed at strengthening our operating performance.
More than two-thirds of our planned performance improvement initiatives have already been executed, and our focus on expense savings puts us on track to realize a significant reduction in addressable1 expenses by 2023. Furthermore, the growth initiatives being implemented are delivering positive results across our activities in our core and growth markets.
In 2021, we continued to invest in the expansion of our distribution network, while simultaneously improving the digital experience for our customers, advisers, and employers. This supported solid growth in our US Life business, together with record-high asset balances in our Dutch mortgage and defined contribution businesses. Meanwhile, net deposits for our UK platform turned positive. I can also point to the track record of our asset management business, which enjoyed a tenth consecutive year of positive third-party net deposits. There is still work to be done, though, including the need to attract more customers, for example to our US Workplace Solutions business.
On the back of our performance improvement initiatives, we have achieved an increase in our operating result, aided by increased fees from higher equity markets and positive contributions from business growth. These drivers were only partly offset by an adverse claims experience in the United States mainly due to COVID-19. We have also maintained a strong balance sheet by actively managing both our risks and our capital position.
Looking ahead to 2022, we will continue the rigorous execution of our performance improvement plan, building on what we have achieved so far. We are actively managing our risks and capital position to maintain a robust balance sheet, as we navigate through the uncertainty created by the current geopolitical situation. The actions we have taken to improve our performance and improve our risk profile provide us with confidence in our ability to deliver on our 2023 financial targets.
Aegon's responsibility to society
Our strategic objectives go beyond operational and financial performance. I understand the important role our company plays within wider society, and I acknowledge the increasing importance of sustainability for Aegon and its stakeholders.
In 2021, we continued to advance our approach to sustainability and responsible investing by further embedding these topics as central pillars within our strategy. We have established a Global Sustainability Board, supported by our Global Corporate Sustainability Team, to realize this goal and intensify our focus on company-wide sustainability targets.
Sustainability is a broad topic, of course, and dialogues with our stakeholders indicate two areas that should be at the forefront of our thinking in the coming years: climate change and inclusion and diversity. In November 2021, we decided to transition our general account investment portfolio to net-zero greenhouse gas emissions by 2050. To ensure progress toward this 2050 commitment, Aegon has set a clear medium-term target for 2025. Alongside this commitment, we are actively strengthening our inclusion and diversity efforts to help position us as a welcoming employer for underrepresented talent. I have been personally involved in exploring ways to further build inclusion and diversity into our talent pipelines, and in 2022 Aegon will appoint a Global Head of Inclusion & Diversity to address this important issue.
Moving closer to our customers and business partners
In 2021, we continued to expand and evolve our offerings to customers across our core and growth markets, with a focus on building close, personal connections. Many recent and ongoing initiatives have been prompted by the need to help people navigate the deep financial and personal impact of the pandemic.
However, I believe the steps we are taking to support our customers now will have positive benefits for our company and its stakeholders for many years to come.
Similarly, we are building closer relationships with our business partners and suppliers around the world to support our efforts to deliver value to our stakeholders. It is especially important that our partners share our values, and over the course of 2021, we continued to integrate specific sustainability criteria and requirements into our supplier selection, development, and ordering processes, as we work to develop a more sustainable supply chain.
Employee engagement top of mind
In a year of tremendous change, the recent period has been particularly transformative for Aegon’s workforce. Against the backdrop of the COVID-19 pandemic, we continue to closely monitor employee wellbeing and engagement amid the disruption taking place all around us. Based on feedback from our employees, we have introduced local initiatives and adapted our ways of working to help people cope with the dual pressures of work and COVID-19.
An unfortunate consequence of our transformation journey is that we have had to say goodbye to valued Aegon colleagues. I extend my respect and concern for those who are no longer employed at Aegon, and thank them for their invaluable contribution over the years. I realize that this has also been a difficult process for all members of our community, and I would like to thank those colleagues continuing with Aegon, too, for their resilience and their continued efforts during this journey.
Looking ahead with purpose
Over the past few months, we have taken time as a company to carefully consider our purpose, and reflect on what makes Aegon relevant to its customers, local communities, and wider society. This has been a valuable exercise: as people generally live longer and embark on non-linear life journeys, their financial behaviors and needs are changing. Aegon is adapting accordingly.
We champion the opportunities offered by a longer, multi-stage life, and seek to support individuals, families, and employers as they move through the resulting changes. This responsibility is at the heart of Aegon’s redefined purpose of Helping people live their best lives, which describes our focus on positive longevity, and how we seek to be a force for good for our customers and other stakeholders throughout their lifetimes. Renewing our purpose provides a common thread that will guide our vision and strategy. This process has also inspired Aegon's new employee behaviors, We tune in, We step up, We are a force for good.
These core behaviors will ensure our entire organization continues to work in unison to create value for our stakeholders. As I look ahead, our solidarity and togetherness will remain vitally important as we navigate new challenges in an increasingly uncertain world. Indeed, the weeks preceding the publication of this Integrated Annual Report saw the escalation of the aggression against Ukraine and its citizens. On behalf of Aegon, I want to express our support to everyone affected by this shocking and saddening situation, and to add our voice to international demands for an immediate cessation of violence.
Thank you to all our stakeholders for your continued contributions and commitment; I look forward to continuing our journey together in 2022 and beyond.
The Hague, the Netherlands, March 16, 2022
CEO of Aegon