Today, with its Solvency II ratio firmly within target range, Aegon the Netherlands’s new management team will provide an update on its strategy and financial outlook.
Aegon the Netherlands is Aegon's second largest business, after Transamerica in the United States. With 2.4 million customers, it contributes over 20% to both the group's earnings and capital generation.
This year, the company's Solvency II ratio increased to 188%, putting it at the high-end of its 150-190% target range. This allows for the absorption of potential shocks, but also provides scope to invest more in alternative assets, and puts Aegon the Netherlands firmly in a position to resume dividend payments to the group in the first half of next year.
This was achieved through a number of initiatives, including the sale of intermediary, Unirobe Meeùs Group (UMG), strong execution on its EUR 50 million expense savings program, and the turnaround of loss-making traditional business.
As well as divesting businesses to optimize capital allocation, the company has also been reducing its exposure in areas such as defined benefit pension solutions . This sizeable customer base, whose products are reaching maturity, offers a considerable retention opportunity for Aegon for the remainder of the customer lifecycle. For other businesses, including term life and pensions annuities, the company has focused on improving returns and capital efficiency through new products and targeted reinsurance.
High-performing brands, such as the company's online innovative bank Knab, have been developed further. Knab has one of the highest Net Promotor Scores in the industry, and has attracted more than 150,000 new customers in just five years. This year, its product offering was expanded to include advice and distribution of mortgages and non-life insurance products, transforming from a bank into a successful financial services platform.
Through product innovation and a low cost base, the company has achieved a leading position in key product segments, including mortgage origination, pension administration, and new-style Defined Contribution products. As a result the company is well positioned to benefit from a number of changes happening in the industry.
Aegon is using advanced data analytics to provide its customers with timely and relevant information to make educated decisions about their financial future. Advanced data analytics not only help the company meet customer demand for tailored products, but also to offer tailored pricing and ultimately increase customer Net Promoter Scores. Data is also being used to automate processes, which reduces costs and increases accuracy.
Aegon the Netherlands is also at the forefront when it comes to applying machine learning and artificial intelligence (AI) to reduce cost and enhance the customer experience. A recent project using AI is already paying off in terms of more accurate and reduced fraud referrals for manual claims handlers.
The company has also established a single data lake for each of its platforms – a considerable achievement for established business like Aegon, running a number of legacy systems and heritage pension and life products. The data lake supports a number of integrated applications. Aegon was the first Dutch insurance company to provide customers with a single app, where they can see and interact with all of their products. Leading innovation remains a competitive advantage.
Shift to fee-based business
Looking forward, the company also has a number of timely new products in development, to support the company's move away from defined benefit products. Aegon Bank, for example is developing an individual investment solution for the third and fourth pillars to help customers save for their retirement. This product offers the same investment options as the company's new-style Defined Contribution company pension plan. Aegon is planning to distribute this to individual customers through intermediaries as well as through the workplace.
This isn't the only example of Aegon's successful shift into new fee-based business models. For example, take the company's growing mortgage business, which now has a nine percent market share in the Netherlands. Over the last three years, more than half of the volume has been for third-party investors. Aegon was also the first to be granted a General Pension Fund license in the Netherlands, called STAP. This is now the largest in the Netherlands with over two billion Euro of assets under management and three billion Euro in commitments.
Learn more about how Aegon the Netherlands is strengthening its capital position, building on its strong market positions, and leveraging its digital skills and partnerships in today's strategy update with its management team. The webcast will be live from 9.00 (CET), with a recording available directly afterwards.