It all starts with our purpose. Aegon is a diversified financial services group that focuses on helping people achieve a lifetime of financial security. We will do so now and in the future by building a leader in investment, protection, and retirement solutions.
We are highly attuned to the needs of a world where lifespans are increasing and careers and retirement are lengthening and becoming more flexible. Although healthcare is becoming more effective, it is also becoming expensive as public and corporate sources of lifelong pension and care are transferring risk to individuals in the face of financial pressure.
Focused portfolio and capital management
During Capital Markets Day in December 2020, we announced Aegon's new strategy and financial targets. With this new strategy we are taking important steps to transform our organization, change our performance trajectory and increase value for our customers, shareholders, and other stakeholders.
As part of our new direction, we are narrowing our strategic focus to selected core and growth markets. We will focus on our three core markets (the United States, the Netherlands, and the United Kingdom), three growth markets (Spain & Portugal, China and Brazil), and one global asset manager.
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Leading in investment, protection and retirement solutions
Our core markets are among the largest retirement, investment and protection markets in the world, and we can play a leading role in them and our asset manager will be a key enabler for success. We have growing businesses in large and under penetrated growth markets, in which we operate with strong local partners.
We will explore opportunities for expanding our positions in our core and growth markets. This could involve capitalizing on local growth opportunities, building strong local partnerships, and pursuing promising sales and distribution channels.
Aegon Asset Management has moved to a single global operation. This allows us to capitalize on economies of scale, maximize synergies, and grow our third-party assets.
In small markets or markets where we have sub-scale or niche positions, we will manage capital tightly and have a bias to exit. The planned sale of our Central & Eastern European businesses exemplifies the actions we are taking to increase our focus.
Reallocating capital
Alongside the geographical refocus of our operations, we have split our portfolio in the core markets in strategic assets and financial assets. Our strategy is to reallocate capital from our financial assets to our strategic assets.
Ambitious financial targets 2021 – 2023
A strong and resilient balance sheet is the foundation of our ambition to deliver attractive and sustainable returns to our shareholders. We have therefore set out the following financial targets for 2021-2023:
- Reduce gross financial leverage to EUR 5.0 – 5.5 billion
- Implement expense savings program of EUR 400 million by 2023 compared with 2019 baseline
- Deliver cumulative free cash flows of EUR 1.4 to 1.6 billion
- Grow dividend per share to around EUR 0.25 over 2023
Value drivers
We have identified priority areas of focus that will contribute to the profitable growth and further strengthening of our business over the coming years.
Aegon will continue to develop its extensive base of nearly 30 million customers. We will do this by increasing market penetration and improving retention in markets where we are well positioned for growth and that offer potential for attractive return on capital.
Specifically, we will explore opportunities to grow Strategic Assets in our core and growth markets, for example our pensions business in China and bancassurance in Spain & Portugal. In tandem with this focused approach, we will also look to increase the penetration of ancillary services such as our own investment solutions and protection proposition.
By modernizing our business, processes, and technology, we will enhance the user experience and offer new and improved customer propositions. We believe high-quality digital tools go together with strong customer relationships.
We will therefore continue to prioritize the development of our front-end adviser and customer portals, starting with our core and growth markets. In the United Kingdom, for example, we are investing in our market-leading platform to improve the digital experience for our customers, while simultaneously enabling Aegon's advisers and other colleagues to work more productively and efficiently.
We are identifying ways to improve margins by reducing expenses, increasing efficiencies, and pursuing opportunities for profitable growth across Aegon's different markets and business lines. Within our core markets, we have carefully identified specific opportunities for profitable growth, for example by expanding our use of proprietary investment solutions. At the same time, we will take steps to exit businesses that are unprofitable or that lack scalability.
Aegon Asset Management's move to a global operating platform will enable us to streamline our operations and improve profitability. Within our new globalized approach, we will also drive growth in affiliate channels in specific markets, such as the Netherlands, as well as growing our third-party assets in areas where competitive strength exists.
We are transforming Aegon to benefit all our stakeholders. To support the actions, we will continue to build a high-performance culture, invest in talent development, and continually strive to Focus. Execute and Deliver.
