The market for company and individual pensions is growing. As one of the world’s leading providers of life insurance, pensions and asset management, we're ideally positioned to benefit from this.
To make an informed decision about investing in Aegon, it's important to understand how insurance companies add value. Find out more about our business model here.
3 Reasons to invest in Aegon
More people than ever are living longer in retirement. By 2050, nearly 1.5 billion people worldwide will be over the age of 65. Of this total, over a quarter will be over 80. At the same time, the market for pensions is also growing as employers and individuals are increasingly expected to take over responsibility for retirement planning.
Aegon is active in over 20 countries around the world, including the Netherlands, United Kingdom and United States. In some instances, such as India and China we operate with joint venture partners, in order to utilize their local expertise and existing distribution channels.
An increasing number of customers want to manage their finances online, with personalized offerings, and access to advisors or customers services, how — by phone, face-to-face, social media etc — and when they choose. Our global presence allows us to share our expertise between markets to deliver cost-effective, accurate and quality solutions through technology.
We were also one of the first insurers to establish a venture fund, Transamerica Ventures, which scans the globe for FinTech and InsureTech startups that offer technology or services that can help our businesses.
With more than 29 million customers, around 25,000 employees and over EUR 825 billion (June 2018) invested on behalf of our customers, we benefit from significant economies of scale. Our size means we can invest in strong global platforms and back-office systems, and are able to spread costs across our large customer base. And our strong capital position guarantees our ability to meet our financial obligations to our stakeholders.
Aegon offers financial products to support its customers through every stage of their life. From life and accident & health insurance during their working life, to saving for retirement, and (guaranteed) income products after retirement. We paid out over EUR 48 billion in claims and benefits in 2017 to help our customers' meet their financial security needs. By offering great service and the products they need, we develop loyal customers who stay with us throughout their lives.
Aegon aims to deliver shareholder value by growing its business, generating capital and paying out dividends to its shareholders.
Our operations around the world are expected to generate EUR 1.4 billion of capital in 2018*, of which the majority is expected to be paid to our holding company. After head office expenses of EUR 300 million, we aim to have ample capital available for redeployment.
It is our intention to return EUR 2.1 billion to shareholders over the period 2016-2018. This will be in the form of dividends of EUR 1.7 billion over a three-year period and a EUR 400 million share buyback that was completed in the first half of 2016.
Between 2012 and 2017 Aegon paid out a stable, growing dividend to shareholders.
A share buyback adds shareholder value in a couple of ways. First, it reduces the number of shares outstanding, which increases our earnings per share (EPS). EPS is one metric used when valuing companies, a higher EPS correlates to a higher market value for the remaining shares. Second, repurchasing shares reduces our equity, which improves our return on equity.
In the EUR 400 million share buyback, which we completed in the first half of 2016, we repurchased shares using our Holding excess capital. We aim to have EUR 1.0–1.5 billion of Holding excess capital, which gives us the financial flexibility to continue pursuing activities to increase shareholder value.
Aegon is dedicated to meeting its long-term commitments to shareholders by delivering sustainable financial results and maintaining a strong and stable balance sheet.
Return on Investment
The continued optimization of our portfolio, together with cost savings programs and a wide range of management actions, will enable us to increase our return on equity. Our objective is to increase our return on equity to 10% by the fourth quarter of 2018.
Our target return on equity will be achieved by:
- organically growing our business in our largest markets profitably;
- reducing expenses by a total of EUR 350 million in the Netherlands, the Americas and the Holding;
- further investment in the digital transformation of our businesses;
- reaching scale in our emerging markets (including Asia and CEE); and
- returning EUR 2.1 billion of capital to shareholders through the payment of an attractive and growing dividend and a EUR 400 million share buyback completed in the first half of 2016.
Solid capital position
Since January 2016, European insurance companies have been required to comply with the new capital adequacy framework, Solvency II, which was introduced to protect policyholders. The framework ensures insurers and supervisors identify risks to capital levels at an earlier stage and take action where needed.
Under the new framework, the level of funds an insurer has to cover its level of risk is expressed as a Solvency II ratio. This means that insurers with higher-risk investments, such as equities, must hold more capital than those investing in lower-risk assets, such as government bonds.
The statutory supervisory standard under Solvency II is 100%, which means that an insurer's capital is such that it would still be able to meet its obligations in the event of a severe shock expected to occur only once every 200 years.
Aegon's Group target range is 150 – 200%.
For the most recent ratios see our latest half-year results press release.
A+ Financial rating
We also have at least an 'A+' financial strength rating from all major independent global rating agencies.