Aegon Limited

Good day and welcome to the Aegon second quarter 2021 results conference call for analysts and investors. Today's conference is being recorded. At this time, I would like to turn the conference over to Jan-Willem Wendema, Head of Investor Relations. Please go ahead, sir.

Thank you, sir. Good morning, everyone, and thank you for joining this conference call on Aegon's second quarter 2021 results. You would appreciate it if you could take a moment to review our disclaimer on forward-looking statements which you can find at the back of the presentation. With me today are Aegon CEO Laert Vriese, Chief Transformation Officer Duncan Russell and CFO Matt Ryder. Let me now hand over to Laert.

Thanks Jan-Willem and good morning everyone. We appreciate that you are joining us on today's call and look forward to updating you on our second quarter results. In my part of the presentation, I will take you through the strategic highlights and through the progress we have made on our strategic assets. Our Chief Transformation Officer, Duncan Russell, will take you through the actions we are taking on our U.S. variable annuity business. And Matt Ryder will then go through the details of the results and our capital position. Finally, I will conclude the presentation with a wrap-up, after which we will open the call for a Q&A session. So let's move to slide number two. We have made steady progress on our strategic priorities and financial targets, and I'm encouraged to see this reflected in our second quarter results. Economic recovery, aided by increased vaccination rates, supported our results. The second quarter of 2021 saw an increase in the operating result across all segments, driven by expense savings, increased fees due to higher equity markets, and normalization of claims experience in the United States. We have made good progress on the implementation of our expense savings program and have seen a €220 million reduction in annual addressable expenses through the second quarter. This strengthens our confidence in our ability to deliver on the three-year target of €400 million expense savings. Our balance sheet remains strong, with the capital ratios of all three main units firmly above their respective operating levels. We have made steady progress in managing our financial assets during the second quarter. We launched a program that offers certain variable annuity customers a lump sum payment in return for surrendering their policies. Furthermore, we plan to dynamically hedge the remaining legacy variable annuity portfolio for equity and interest rate risks. These two initiatives will create value by releasing capital at terms we believe are favorable compared to other alternatives, and increases the predictability of the capital that the business generates. By introducing new innovative products, expanding distribution, and enhancing customer service, we are driving growth in our strategic asset category. We achieved double-digit sales growth in U.S. life, delivered another quarter of strong sales in U.S. middle market retirement plans, and almost doubled the net deposits in our UK workplace business. We continued our strong growth momentum in the Netherlands, with record high levels of both mortgages under administration and assets under administration in new style defined contribution pensions. Aegon Asset Management also continued its growth track record of positive third-party net deposits, as strong demand for our solutions, both in our wholly owned business and in our Chinese joint venture, continues. In our ESG portfolio, Egon Asset Management and its partners have helped fund investments in affordable and workforce housing units in the United States to better serve our local communities. We have also continued to improve our risk profile, having already executed around two-thirds of our planned management actions to reduce interest rate risk in the United States. The progress we are making on our strategic priorities and financial targets provides us with the confidence to accelerate the increase in dividends on our path to pay around 25 euro cents per common share by 2023. Therefore, we are announcing today an increase of our interim dividend by 2 euro cents to 8 euro cents per common share. Furthermore, the strength of our balance sheet allows us to take another step towards achieving our deleveraging target. We are therefore announcing the redemption of 250 million US dollar professional capital securities in the third quarter. Let me now give you an overview of where we stand with the execution of our operating plan on slide number three. Our ambitious plan comprises more than 1,100 detailed initiatives designed to improve our operating performance by reducing cost, expanding margins, and growing profitably. We have continued the rapid pace and execution rhythm throughout the second quarter. We've been successful in doing that as we have completed another 110 initiatives in the second quarter, bringing the total to over 500. This means that 45% of all initiatives have now been fully implemented, and they will contribute to the operating result over time. Expense savings initiatives have already delivered €220 million of savings, which is more than half of our €400 million expense reduction target. That strengthens our confidence in our ability to deliver on the target for 2023. Initiatives aimed at improving customer service, enhancing user experience, and launching new innovative products are also well underway. These growth initiatives contributed €26 million to the operating result in the second quarter of 2021. We intend to continue the rapid pace and intense organizational rhythm throughout the remainder of the year and beyond. Let's turn to slide four to discuss the progress we have made with respect to our strategic assets. Our priority here is to grow the customer base and expand our margins. In U.S. individual solutions, we have the ambition to regain the top five position in selected live products over the coming years. In the second quarter, improving commercial momentum resulted in a 24% increase in new live sales. World Financial Group increased the number of licensed agents by 13% compared with the second quarter of last year. We also expanded our market share in this distribution channel through the addition of a new funeral planning benefit. Furthermore, whole life final expense sales increased by 39% following enhancements made to both the products and the application process. Volume growth, a more favorable product mix, and lower expenses resulted in a 40% increase in the value of new business. The U.S. retirement business, Transamerica, aims to compete as a top five player in the new middle market sales. This business continued to build momentum with the fourth consecutive quarter of written sales of over $1 billion, and the second consecutive quarter of positive net deposits. Written sales were supported by pooled plan arrangement contract wins, which are a strategic growth driver. Sales from these types of arrangements more than doubled and now represent more than one-third of this quarter's middle market sales. So let's turn to Dutch strategic assets on slide five. We are market leader in both mortgage origination and new style defined contribution pensions, and we continued our momentum in the second quarter. We originated 2.9 billion euro mortgages in the second quarter, benefiting from a strong housing market. Mortgages under administration reached a record high of 58 billion euro. In our workplace business, we saw a 20% increase in net deposits for new style defined contribution products. Assets under management for this business surpassing the 5 billion euro mark for the first time, underscoring Agon's leading position in this market. We want to develop the online bank KNUP into a digital gateway for individual retirement solutions. KNUP continued its growth trajectory in this quarter. In the United Kingdom, assets under administration reached 200 billion pounds sterling for the first time, driven by net deposits and favorable market movements. Our aim is to grow in the retail and workplace channels of our platform business. In these channels, we doubled the net deposits to 1 billion pounds, which included a significant massive trust contract win. This underscores that we are well positioned in this fast-growing market of multi-employer pension schemes. Market movements and expense savings have helped to further improve the efficiency of the platform. By growing the platform business and taking out expenses, we aim to mitigate the impact from the gradual runoff of the traditional portfolio which is the driver behind the annualized revenues lost from net deposits for the quarter. So let me turn to our global asset manager and our growth markets of slide number six. In our asset management business, we aim to significantly increase the operating margin of the global platforms business by improving efficiency and driving growth. Third-party net deposits on the global platforms were 2.1 billion euros. driven by significant net deposits in various investment strategies in the fixed income platform. The operating margin of the global platform's business increased by nearly two percentage points. This resulted from higher revenues from net deposits, favorable market developments, and higher origination fees in Agon's real assets business. These origination fees were driven by responsible investing mandates in workforce and affordable housing. Net deposits and strategic partnerships were €815 million for the quarter, driven by our joint venture in China. Increased performance fees and management fees from growth of the business led to a significant increase in the operating result for strategic partnerships to €56 million. In AGON's growth markets, we continue to invest in profitable growth. The value of new business from new life sales increased by 6%, mainly driven by higher sales in Brazil, Spain, and Portugal. New premium production for property and casualty in accident health insurance increased to €28 million as a result of new product launched in Spain and Portugal. Here, sales through our Spanish bank assurance partners are benefiting from the redesign of the digital sales channels to accelerate the digital transformation in insurance distribution. These actions supported the doubling of sales through the digital channels to over 15% of the total production in June. In summary, on slide number seven, we are making steady progress in growing our strategic assets. We will continue to drive efficiencies while at the same time investing in products and services to our customers in the various core businesses. And with this, I would like to hand it over to Duncan, who will talk about the actions we've taken regarding our U.S. variable annuity business. So, Duncan, over to you.