Building on a strong foundation, Aegon is undergoing a transformation to become a more focused, high-performing group.
Aegon is a major international provider of insurance, pensions, and asset management with businesses in more than 20 countries in the Americas, Europe, and Asia. Our purpose is to
help people achieve a lifetime of financial security.
Aegon has a long and proud history of fulfilling our purpose and serving all our stakeholders. We recognize that our company needs to adapt to changing times, particularly in challenging situations. Currently, the wide-ranging effects of the COVID-19 are being felt across all aspects of society, and Aegon has not been immune.
Lard Friese was appointed as our CEO in the middle of the pandemic. When presenting our half-year results on August 13, 2020, he outlined management’s ambition was to transform Aegon into a more focused, high-performing group. A group with a balanced portfolio of businesses that generates reliable free cash flows and delivers sustainable and attractive shareholder returns.
Aegon’s is focusing on four areas to achieve this ambition:
- Strengthening of the balance sheet
- Creating a more disciplined management culture
- Improving efficiency
- Increasing strategic focus
Actions to strengthen the balance sheet
Several steps were announced during the presentation of the first-half results:
2019 final dividend
Aegon is retaining the final dividend for 2019.
The interim dividend is being rebased from 15 cents last year to 6 cents for 2020. Aegon's management anticipates that the rebased dividend will be adequately covered by free cash flows, even in reasonable stress scenarios. From now on, dividends and other means of capital return to shareholders will be based on a regular assessment of the company's financials, in accordance with customary governance. Also see our dividend policy.
Strengthening the balance sheet
Free cash flow in excess of what is needed to cover shareholder dividends and holding company expenses will, for the time being, be used to reduce leverage and strengthen the balance sheet.
Updating key assumptions
Aegon has implemented substantial updates for key assumptions in our US business as part of the annual assumption review process.
Aegon has not taken the decision to rebase shareholder dividends lightly. CEO Lard Friese: "We realize that this business should over time be able to produce more than this level of dividend by way of capital return, and we believe that it can. But for now, this is the right level of dividend which allows us to deal with deleveraging, reduce the risk profile of the company, and navigate through the COVID-19 pandemic."
Improving operating performance
The management team is working on plans to improve Aegon's operating performance and increase its free cash flows. Achieving this in the coming years will put the business in a place where it can produce higher levels of capital return from dividends and share buybacks. Friese: "I am confident that there is ample opportunity for Aegon to create value for its stakeholders as we have strong foundations to build on."
Increasing strategic focus
Aegon operates in more than 20 countries and management believes that the group needs to sharpen its strategic focus. This requires disciplined capital allocation and portfolio decisions by concentrating on those countries and business lines where Aegon can create most value.
Creating a high-performance culture
Additional measures are being taken to build a high-performance culture, where underperformance will be addressed without delay and decisions are taken in a timely fashion. The goal is to foster a sense of ownership throughout the organization. Complexity will also be reduced to minimize the risk of negative surprises, and Aegon will attract new talent to complement the existing internal pool of talent.
Capital Markets Day
Aegon will update analysts and investors on its transformation plans and the outlook for future dividends at a Capital Market Day on December 10, 2020. The event's theme is
Focus. Execute. Deliver.