Aegon Limited

Welcome to the Agon second quarter 2022 results conference call for analyst investors. Today's call is being recorded. At this time, I would like to turn the conference over to Jean Willem. Please go ahead, sir.

Thank you, operator. Good morning, everyone, and thank you for joining this conference call on Agon's second 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 Aegon's CEO, Laert Friese, and CFO, Matt Ryder. After a brief update on our results by Laert and Matt, we'll open the floor to Q&A. Let me give the floor to Laert.

Thank you, Jan-Willem, and good morning, everyone. The first half year of 2022 was challenging for investors, with equity markets experiencing their worst start of the year in over five decades. Volatility remained as the war in the Ukraine continued and central banks increased interest rates to curb rising inflation. Against this challenging backdrop, we performed well, a testament to the strength of our strategy. Despite the impact from lower equity markets, our second quarter operating result was strong. This reflects the receding impact of COVID-19 and the progress we are making on our operational improvement plan. We delivered further savings and continued to build on our growth initiatives. In our strategic assets, we maintained commercial momentum even in a challenging market environment. Agon's net result was impacted by a one-time charge due to reinsurance rate increases in the United States. Nonetheless, we remain on course to deliver on our objective of growing returns to our stockholders. Our balance sheet is strong with the capital positions of our three main units above their respective operating levels. Cash capital at the holding stands above the operating range. Together with the growth in free cash flow, This is a solid basis to raise the interim dividends to 11 euro cents per common share. We also continue to make progress on our approach to sustainability. As part of our efforts to contribute to a climate neutral world, Agon Asset Management partnered in the launch of a 600 million US dollar venture to acquire multifamily dwellings and transition them to low carbon, energy efficient buildings in the US. In the recent months, we moved over 3 billion pounds of assets from our UK customers into strategies that consider ESG credentials. This is part of the commitment to achieve net zero carbon emissions in the default investment options of our UK pension administration platform by 2050. Based on the progress we have made on our transformations so far, we are comfortable increasing our expectations for cumulative free cash flow over the period 2021 to 23 from a range of 1.4 to 1.6 billion euros to at least 2.2 billion euros. We are also raising our expectation for operating capital generation in the units for 2022 to around 1.4 billion euros. So let us move to slide number three. You can see that we continue to progress with the execution of our operational improvement plan. We have now implemented 1,558 out of more than 1,200 initiatives as part of this plan. Just in the last three months, we finalized about 120 initiatives. Expense initiatives resulted in a reduction of our annual addressable expenses of 250 million euros in the trailing four quarters. We continue to experience inflation headwinds But so far, we've been able to absorb these and further reduce our expense base towards our goal of 400 million expense savings. And I remain confident that we will reach this target by 2023. We are also increasingly seeing the benefits from our growth initiatives. The 240 growth initiatives that have been executed so far have had a positive impact on our operating results. Over the trailing four quarters, growth initiatives contributed 215 million euros to the result. We will, of course, maintain an intense execution rhythm to further implement our operational improvement plan in the coming quarters. So let's turn to slide four to discuss the progress of 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. As you can see, new life sales increased by 12% compared with the second quarter of last year. This was supported by the World Financial Group distribution channel, which benefited from a 12% growth in the number of licensed life agents compared with last year. In the retirement business, Transamerica aims to compete as a top five player in the new middle market sales. Written sales were approximately $850 million this quarter, while net deposits for the middle market increased to $467 million, benefiting from strong written sales in prior periods. We have further expanded our suite of financial wellness solutions in the workplace business, by introducing a product called Emergency Savings Account. The product enables employers to help their employees save for unexpected events and improve their financial well-being. When we turn to slide five, we're looking at the performance of 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, a decrease compared with last year due to reduced financing activity in the market of increasing mortgage interest rates. Nevertheless, mortgages under administration continue to grow, increasing over 3 billion euros compared with last year to almost 62 billion euros. We also continue to consistently grow our workplace business. Net deposits for defined contribution pension products amounted to 191 million euros in the second quarter of 2022, which is nearly on the same level as in the prior year quarter. Moving on to the United Kingdom, we saw the platform business generated net deposits of 317 million pounds across the workplace and retail channels. Net deposits on the platform positively contributed to revenues, but were more than offset by revenues lost from the gradual runoff of the traditional product portfolio. Expense savings initiatives offset the impact from market movements on assets under administration, leading to a stable efficiency ratio of the platform. On slide number six, we see that our asset management business saw third-party net outflows in the global platforms amount to approximately 800 million euro, reflecting the challenging market conditions. Continued net deposits into the Dutch mortgage fund were more than offset by outflows in other asset classes, as we saw customers freeing up liquidity in a rising interest rate environment. The operating margin of global platforms decreased by around two percentage points to approximately 12%. On a constant currency basis, lower revenues due to adverse market conditions more than offset expense savings. Our strategic partnerships and asset management continue to perform well with net deposits of more than 1.1 billion euros. Performance fees normalized from their exceptional high level last year. This is why you see the operating result from strategic partnerships decrease to 36 million euro. In our growth markets, Agon is investing in profitable growth. New live sales from these markets increased by 5% to €55 million, and non-live sales grew by 8% to €31 million, both mainly due to sales growth in the Bank Assurance channel in Spain. In summary, we've performed well against a challenging backdrop, which is a testament to the strength of our strategy. Matt will now talk you through our financial results for the second quarter in more detail. Matt, over to you.