Aegon Limited

Good day and thank you for standing by. Welcome to the Ergon second half 2023 results call. At this time, all participants are in a listen only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to slowly press star one and one on your telephone. You will then hear an automated message advising your hand is raised. Please note that today's conference is being recorded. I would now like to hand the conference over to your speaker. Yves Cormier, Head of Investor Relations. Please go ahead.

Thank you, Operator, and good morning to everyone. Thank you for joining this conference call on EGON's second half year 2023 results. My name is Yves Cormier, and I'm the Head of Investor Relations. Joining me today are EGON CEO Lars Friese and CFO Matt Ryder to take you through the highlights of the year, our financial results, and the progress we are making in the transformation of EGON. After that, we will continue with a Q&A session. Before we start, we would like to ask you to review our disclaimer on forward-looking statements, which you can find at the back of the presentation. And on that note, I will now give the floor to Lars.

Yes, merci, Yves. Good morning, everyone, and thank you for joining us on today's call. I will run you through our strategic and commercial developments before handing over to Matt, who will run through the financial results in more detail. Let's move to slide number two to review our achievements in the second half of 2023. 2023 was another important transformational year for Agon. During the year, we completed the transaction with ASR, initiated a significant share buyback program, reduced our gross financial leverage, presented our ambitions for the coming years at our capital markets day last June, and moved our legal seat to Bermuda. At the same time, we have remained laser focused on improving returns from our businesses and generating value for shareholders, which we will continue to do. The second half of 2023 saw Agon maintain commercial momentum, mainly driven by the strong performance of our US business. We have exceeded our financial commitments for 2023 and remain committed to our targets for 2025. I'm very proud of everything the teams have achieved in 2023, and I'm grateful for all of their hard work during the year. We will continue to work hard executing our strategy in 2024, and I am optimistic about our prospects. In the second half of 2023, operating capital generation before holding funding and operating expenses was 16% higher than in the same period of 2022. Earnings on Inforce rose by 16% driven by business growth in U.S. strategic assets and management actions we have taken on the financial assets. Over the full year 2023, operating capital generation before holding funding and operating expenses was 14% higher than 2022 at nearly 1.3 billion euros, well above our guidance. The IFRS offering results decreased to 681 million euros in the second half of 2023, due in part to the impact of management actions we have previously taken, as well as several favorable one-time items in the previous year. Shareholders' equity per share has remained stable, despite the significant distribution of capital to shareholders. The capital ratios of our units remain strong, and well above their respective operating levels. Furthermore, cash capital of the holding amounted to 2.4 billion euros, well above the operating level, despite reducing leverage by 500 million euros in the fourth quarter and making good progress executing the 1.5 billion euros share buyback program. At the end of last week, we have completed 76% of this program, which means we have already returned more than 1.1 billion euros to stockholders through this program alone. In addition, our strong commercial performance, together with the important steps we have taken to realign our company, have given us a solid foundation on which to sustainably grow our dividend per share. We have increased the proposed final dividend for 2023 to 16 euro cents per share. And subject to shareholder approval, this would bring our full year dividend to 30 cents per common share up more than 30% compared with the 2022 and in line with our guidance. Let's turn to slide number three to discuss the commercial results of our units. Starting in the Americas, one of the two focus areas in our U.S. Individual Solutions business is World Financial Group, or WFT, our Life Insurance Distribution Network. Let me remind you, our ambition is to increase the number of WFG agents to 110,000 by 2027, while at the same time improving agent productivity. Momentum has been strong throughout the year. During 2023, the number of licensed agents has increased by 18% compared with the year in 2022 to nearly 74,000. In addition, The improvement in agent productivity is a priority for us. The number of multi-ticket agents, which are agents selling more than one life policy over the last 12 months, has increased by 12% compared with a year ago. Transamerica's market share of life insurance products sold by WFG in the US remains high at 64%. This is due to the consistent service experience we deliver to WFG agents combined with the tailored products we manufacture for WFG that appeal to middle market consumers, our key demographic. Let's move to slide number four, and I will address the second focus area of our U.S. individual solutions business, individual life insurance. Here, we are investing in both product manufacturing capabilities and the operating model in order to position the individual life insurance business for further growth through WFG and third-party distributors. Commercial momentum was strong throughout the year. New life sales increased by 13% compared with 2022, largely driven by higher index universal life sales. Importantly, we have been able to maintain the profitability of new sales, achieving internal rates of returns in excess of 12%. Increased sales of individual life insurance in 2023 led to an increase in new business strain of 10%. Business growth was also the main driver of the 31% increase in earnings on in-force compared to the full year 2022. Slide number five addresses the progress we have made in the U.S. workplace solutions retirement plans business. Transamerica aims to increase hearings on Inforce from its retirement business by leveraging its capabilities as a record keeper with the ambition to materially increase the penetration of ancillary products and services it offers. During 2023, commercial results were strong in our focus area of mid-sized plans. Here, written sales rose by 72% compared with 2022, and net deposits amounted to $1.2 billion in 2023. We also saw good growth in ancillary products, such as the general account stable value product, as well as in individual retirement accounts. This is in line with our strategy to grow and diversify our revenue stream. The decrease in earnings and in force of our strategic assets in the retirement plans business was driven by higher expenses largely related to increased employee and technology expenses. Let's move on to the United Kingdom on slide number six. We continue to make good progress on our strategic agenda of investing and growing our platform activities. From a commercial perspective, the year has been characterized by two different trends. The workplace channel shows strong commercial results throughout 2023. Net deposits in the workplace channel amounted to 1.8 billion pounds in 2023. However, if we exclude the exit of a single large and low margin scheme in the third quarter, the net deposits would have amounted to 2.7 billion pounds in 2023. The solid net deposits in the workplace channel reflect inflows from the onboarding of new schemes as well as higher net deposits on existing schemes. We expect this trend to continue. In the retail channel, on the other hand, commercial results continue to be hampered by the current macroeconomic environment, which has negatively impacted investor sentiment across the industry. Net outflows in the retail channel amounted to £3.1 billion in 2023, and explain in part the overall 16 million pounds of annualized revenues lost on net deposits in the year. The remainder is due to the impact of gradual runoff of the traditional product portfolio, partially upset by revenues gained on net deposits in the workplace channel. On slide number seven, I want to address the growth markets where we continue to make steady progress. New live sales in our growth markets increased by 18% compared with 2022, with good growth in both Brazil and China, offsetting weaker sales in Spain, in part due to a divestment there in the previous year. Over the same period, non-life new premium production increased by 15% as weaker demand for property and cash products was more than offset by growth in accident and health insurance. Operating capital generation in the international segment, excluding TLV, increased by 8% in 2023 compared to 2022 as a result of business growth and more favorable new business strength. I'm turning now to slide number eight to comment on our asset manager. Market conditions have been especially challenging for fixed income focused asset managers, such as our global platforms business as interest rates rose in 2022 and 23. In the latter months of 2023, however, interest rates stabilized and commercial results have improved, especially in the fourth quarter, for instance, in our mortgage funds. In addition, we are benefiting from the new asset management joint venture with ASR, as well as the other strategic initiatives we have undertaken recently. Net outflows in our global platforms amounted to 600 million euros for the full year 2023, but they were negligible in the second half of the year. In the strategic partnership segment, net outflows amounted to 2.8 billion euros in 2023. The La Banque Postale asset management joint venture experienced net outflows mainly due to the departure of a low margin business of a former shareholder. Meanwhile, in the joint venture AIFMC, Net outflows were driven by continued weak investor sentiment in China. These unfavorable market conditions and net outflows drove the decrease of operating capital generation in 23 compared with the year before 2022. Now I hand over to Matt to discuss the financial performance of Agon in more detail, starting on slide number nine.