Aegon announces today that it has completed the divestment of its Hungarian businesses to Vienna Insurance Group AG Wiener Versicherung Gruppe (VIG). The gross proceeds of the transaction amount to EUR 620 million. This completion is an important step towards the full closing of the sale of Aegon’s insurance, pension, and asset management businesses in Central and Eastern Europe to VIG for EUR 830 million, as announced in November 2020. The sales of Aegon’s businesses in Poland, Romania and Turkey are expected to be completed in the course of 2022, subject to required local regulatory approvals.
"Today's announcement marks an important step in the transformation of Aegon as we narrow our strategic focus to select core and growth markets, and further strengthen our balance sheet", said Lard Friese, CEO Aegon. "I would like to sincerely thank our employees in Hungary for their significant contribution to Aegon over the years."
The closing of the sale of the Hungarian businesses will result in a significant increase of Aegon’s Cash Capital at the Holding – which amounted to EUR 1.3 billion at the end of 2021 – and brings it above the stated operating range of EUR 0.5 billion to EUR 1.5 billion. This provides Aegon with the financial flexibility to announce today a reduction of its debt through a EUR 375 million tender offer, as well as the intention to return surplus cash capital to its shareholders via a EUR 300 million share buyback, barring unforeseen circumstances. These actions are in line with the ambitions stated at the Capital Markets Day in December 2020.
"I am very pleased that by further reducing our debt, we are able to deliver on our deleveraging goal well ahead of our 2023 target date”, Lard Friese added. "Today’s announced share buyback also underscores our intention to return surplus cash capital to shareholders."
Debt tender offer and share buyback
The debt repayment will be executed through a EUR 375 million tender offer for six subordinated bonds. Details of the debt tender offer will be disclosed via a separate press release today. After completion of the tender offer, Aegon will have reduced its gross financial leverage to the range of EUR 5.0 billion to EUR 5.5 billion, a target that was set to be accomplished by 2023.
Additionally, Aegon intends to return EUR 300 million of surplus cash capital to shareholders via a share buyback in the course of 2022. The share buyback will be executed in three tranches of EUR 100 million each, with each tranche conditional on maintaining the capital positions of Aegon's main units in line with its stated ambitions, and the Cash Capital at the Holding being above the middle of the operating range.
The EUR 300 million share buyback program will commence on April 1, 2022 and is expected to be completed on or before December 15, 2022. The first tranche of EUR 100 million is expected to be completed on or before June 30, 2022. For each tranche Aegon will engage a third party to execute the buyback transactions on its behalf. The common shares will be repurchased at a maximum of the average of the daily volume-weighted average prices during the repurchase period, and will subsequently be proposed to be cancelled at Aegon’s 2023 Annual General Meeting of Shareholders.
Following the divestment of Aegon's businesses in Hungary, Aegon’s IFRS equity will increase by approximately EUR 400 million in the first quarter of 2022, of which approximately EUR 375 million will be recognized as a book gain, based on the balance sheet position on December 31, 2021. The combination of the completion of the sale of Aegon’s Hungarian businesses, the repayment of the debt and the share buyback will not have a material impact on the Group Solvency II ratio.