Aegon Limited

Good day and welcome to the Agon's first quarter 2022 results conference call for analysts and investors. Today's conference is being recorded. At this time, I'd like to turn the conference over to Jan Willem Verdema, Head of Investor Relations. Please go ahead, sir.

Thank you, operator. Good morning, everyone, and thank you for joining this conference call on Agon's first quarter 2022 results. Before we start, we 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 EGOL CEO, Lars Friese, CFO, Matt Ryder, and Chief Transformation Officer, Duncan Russell. Let me now give the floor to Lars.

Thanks, John Milliman. Good morning, everyone. We appreciate that you are joining us on today's call and look forward to updating you on our first quarter results and the progress we're making against our strategic and financial objectives. So let's turn to slide number two. The first three months of 2022 have been unprecedented in many ways. The Russian invasion in Ukraine has had a devastating impact on the lives of many people. It also further fueled inflationary pressures and volatility on the global financial markets at a time that many economies were opening up after relaxing COVID-19 measures. I'm proud of our colleagues who continue to effectively support and service our customers in this turbulent environment. Our results and the progress we made on our 2023 strategic and financial objectives are evidence of their great work. Despite the challenging environment, we have achieved higher sales in many of our strategic assets. We continued sharpening our strategic focus Most importantly, through the completion of the divestments of our businesses in Hungary and Turkey to the Vienna Insurance Group. The closing of the sale of our Hungarian businesses resulted in a significant increase in cash capital at the holding. This enabled us to announce a share buyback program and to further reduce our debt. As a result, we have brought our debt into our target range. while maintaining a capital position that allows us to distribute excess cash to shareholders. Let me now share with you where we stand on the execution of our operational improvement plan on slide number three. We have made good progress on our operational improvement plan, which, if you recall, included more than 1,200 initiatives. We have fully implemented more than 900 of these already, of which nearly 100 were completed in the first three months of this year. So far, expense savings have contributed €234 million to the operating result in the trailing four quarters. This level is comparable to previous quarter as the benefit from expense savings initiatives was offset. by an increase of performance-related compensation and the unfavorable timing of IT expenses. The latter is expected to even out over the rest of the year, and we are confident that we will achieve our 400 million euro expense savings target by 2023. In the rest of 2022, we will maintain an intense execution rhythm. Continued discipline in reducing expenses is especially important, given the inflationary pressures that we are facing. Additionally, our growth initiatives are well underway, contributing €165 million to the operating results over the trailing four quarters. This means that we have reached the target we set at the Capital Markets Day. Let's now turn to slide four to discuss the progress we have made on our U.S. strategic assets. In individual solutions, we have the ambition to regain a top five position in selected life products over the coming years. New life sales increased by 12% compared with the first quarter of last year, supported by continued growth in the number of licensed agents at World Financial Group. In the retirement business, Transamerica aims to compete as a top five player in new middle market sales. This business continued to build momentum, with this now being the seventh consecutive quarter of written sales over $1 billion. Net deposits consequently turned positive for the middle market and amounted to $288 million for the first quarter of 2022. On slide five, I discuss our Dutch and UK strategic assets. In the Netherlands, we are market leaders in both mortgage origination and defined contribution pensions and continue to attract new customers. Mortgage sales amounted to 2.4 billion euros, of which two-thirds were originated for third-party investors. Sales have come down somewhat from last year due to our focus on maintaining attractive margins. Nevertheless, mortgages under administration grew by over €4 billion compared with the first quarter of 2021 to almost €61 billion. We're also consistently growing our workplace business. Net deposits for defined contribution pension products increased by 8% to €186 million in the first quarter of 2022. Our offering is low-cost. thanks to the scale of our administration subsidiary, TKP. Recently, TKP onboarded the pension fund for the metal and technology industry with over 600,000 participants. This brings the total number of pension participants serviced to 3.7 million. Moving on to the United Kingdom, the platform business generated net deposits of £724 million across the workplace and retail channels. Net deposits for the retail channel turned positive and were the best since the replatforming of the co-funds business in 2018. Enhancements made to the platform's functionality and investments in the servicing of intermediaries have been driving the gradual improvement in net deposits. Expense savings initiatives and the impact from favorable markets on assets led to an improvement in the efficiency of the platform. This more than upset the revenues lost from the gradual runoff of the traditional product portfolio.