Following completion of Aegon’s full repayment to the Dutch State last week, CEO Alex Wynaendts and senior management will detail their plans to deliver sustainable earnings growth for its businesses in the Americas, the Netherlands, the UK and Central & Eastern Europe. Aegon is hosting its Analyst & Investor Conference in London today and tomorrow. All presentations will be available on www.Aegon.com as of 6 pm CET.
In recent years, Aegon has implemented a broad restructuring of its operations, either divesting or running-off businesses which did not meet its risk-return profile or contribute to the company’s long-term growth prospects. This has resulted in significantly reducing the company’s exposure to financial market risk, as well as establishing a lower cost base for its main operations in the US, the UK and the Netherlands. It is from this new base that Aegon will pursue its financial targets.
“The steps we have taken since 2008 have significantly transformed Aegon,” said Alex Wynaendts. “With the completion of repayment to the Dutch State, we are focusing our full attention to achieving ambitious financial targets, consistent with our ambition to be a leader in all our chosen markets in the coming years. As we transition to a new base following the significant restructuring of our operations, we are confident in our ability to generate solid earnings growth with an improved risk-return profile, pay sustainable dividends to shareholders and, at the same time, become the most-recommended provider among our current and future customers and partners.”
Specifically, Aegon aims to:
Grow underlying earnings before tax on average by 7 to 10% per annum between 2010 and 2015.
Achieve a return on equity of 10% to 12% by 2015.
Increase fee businesses to 30% to 35% of underlying earnings before tax by 2015.
Increase normalized operational free cash flow by 30% by 2015.
Resume dividend payments with dividend of EUR 0.10 per common share related to H2 2011 in May 2012.
Aegon aims to grow its underlying earnings before tax and improve its return on equity by growth of the business and cost reductions, in combination with redeployment of capital to areas with stronger growth and higher return prospects. Supporting its target to grow fee business to 30% to 35% of underlying earnings before tax from its 2010 level of 16%, Aegon aims to increase fee-based earnings in the Americas, primarily from its variable annuity and pensions lines of business. At the same time, Aegon aims to more than double fee-based earnings in the UK and in New Markets. The growth in fee-based earnings will be additionally supported by its asset management and European variable annuity businesses.
It is Aegon’s ambition to grow normalized operational free cash flows by 30% by 2015. The growth in cash flows will be mainly driven by strong improvements in the UK and Americas. In the UK, normalized operating cash flows will improve significantly driven by lower commission payments and the result of cost reductions. In the Americas, cash flows are benefiting from further business growth.
Additionally, Aegon has set a target to achieve a capital base ratio of at least 75% by the end of 2012 and maintain at least EUR 900 million of excess capital in the Holding. Absent unforeseen circumstances, Aegon intends to pay a EUR 0.10 dividend per common share over the second half of 2011, to be paid in May 2012.
Aegon manages its business on an economic framework basis, meaning that it prices its products based on hedgeable market circumstances, versus assumptions about future economic conditions. Aegon will begin publishing market-consistent value of new business (MCVNB) results with the publication of its first quarter results next year.
Aegon’s ambition to be a leader in all of its chosen markets by 2015 is supported by four strategic objectives: Optimize our Portfolio, Enhance Customer Loyalty, Deliver Operational Excellence and Empower Employees. These key objectives have been embedded in all Aegon businesses and provide the strategic framework for becoming the most-recommended life insurance and pension provider by customers and distributors, as well as the most-preferred employer in the sector.