Aegon Limited

Good morning, everyone. I would like to welcome you to this conference call on EGON's second half-year 2025 results. My name is Yves Cormier, Head of Investor Relations. Joining me today to take you through our progress are EGON CEO, Lard Friese, and CFO, Duncan Russell. Before we start, I would like to ask you to review our disclaimer on forward-looking statements, which you can find at the end of the presentation. And with that, I would like to give the floor to Lard.

Yes, thank you, Eve. Good morning, everyone. I will start today's presentation by running you through our strategic developments and commercial performance in 2025 before Duncan will go through the results in more detail. So let me start with slide number two with the key messages for the year. Our results over 2025 demonstrate the strength of our strategy and our ability to consistently deliver upon our ambitions. We have either met or outperformed all our financial targets for 2025. Operating capital generation before holding and funding expenses increased year over year to 1.3 billion euro ahead of target. Our operating results increased by 15% compared with 2024 to 1.7 billion euro. This increase reflected business growth across all units, favorable market impacts, and improved experience variances in the Americas and international businesses. Free cash flow for the full year 2025 was at 829 million euro, consistent with our target. On the back of our strong capital position and financial performance, we propose a final dividend of 21 cents per common share, resulting in a full year 2025 dividend of 40 cents per share, in line with our target and up 14% from 35 cents per share over 2024. Furthermore, we executed 400 million Euro of share buybacks in the second half of 2025. And we are currently executing the first half of our new 400 million buyback program for 2026, as announced at our Capital Markets Day in 2025. Commercial momentum remains strong in 2025. In our U.S. strategic assets, we continue to grow WFT, as well as our new life sales and our retirement plan assets. At the same time, we continue to reduce our exposure to financial assets. The capital employed in this segment was $2.7 billion at year end, ahead of our target. We also reported solid results in our other business units in 2025. Our asset manager delivered net third-party inflows. Our U.K. workplace platform generated healthy net inflows, and our international business continued to perform well. Finally, we are making progress with the preparations for our proposed relocation to the U.S. as announced at the Capital Markets Day. U.S. GOP implementation is still at an early stage, but is progressing as planned. I'm now turning to slide three to run through the commercial performance of the Americas in more detail. As we discussed at our 2025 Capital Markets Day, progress in the Americas remains strong. Starting with World Financial Group, we remain on track to grow the number of licensed agents to around 110,000 in 2027. As of year end 2025, the number of licensed agents amounted to nearly 96,000, an 11% increase on the previous year. Initiatives to improve agent productivity have led to a higher number of producing agents. In addition, producing agents also sold a higher average number of policies and a higher average premium per policy sold. As a result, new life sales increased by 10% compared with 2024, while sales of annuities increased by 6%. The productivity gains at WFG were one of the key drivers of the 30% increase in new life sales in our individual life business. We also recorded strong new life sales of the final expense product that we offer in the instant decision market through a fully digital underwriting platform. Furthermore, we continue to successfully grow our RILA sales. We achieved a 45% increase in indexed annuity net deposits in 2025, thanks to higher gross deposits from further improvements in wholesale distribution productivity. In the savings and investment segment, the midsize retirement plans business reported net inflows in 2025 on the back of our strong positioning in the pool plan space and supported by a large takeover deposit earlier in the year. The level of written sales remains solid, which will support gross deposits going forward. We also generated further growth in both general accounts stable value and individual retirement accounts as we work to increase profitability and diversify revenue streams of the retirement plans business. I'm now moving to slide four for an update on our other businesses. At Agon UK, we continue to be well positioned in the workplace platform business. Net deposits during 2025 were driven by both the onboarding of new schemes and members and regular contributions from existing schemes. For the advisor platform business, net outflows in 2025 reflected ongoing consolidation and vertical integration in non-target advisor segments. As announced at our 2025 Capital Markets Day, the strategic review of the Agon UK is ongoing. In our international segment, new sales continue to contribute to the growth of the book in 2025. Our joint venture in Brazil reported higher new life sales, particularly in credit life products, as did our activities in Spain and Portugal. In China, new life sales were negatively impacted by changes to product pricing to reflect the new pricing regulations and the current economic environment. Agon Asset Management generated positive third-party net deposits during the year in both global platforms and strategic partnership businesses. although at a lower level than last year. In global platforms, net deposits were mostly driven by fixed income products and more than offset outflows from the STUL reinsurance transaction that we did last year. In strategic partnerships, net deposits were driven by our Chinese joint venture, AIFMC. We are implementing the plan for asset management as presented at the 2025 Capital Markets Day. For instance, We recently expanded our CLR warehouse capacity in the US and Europe in line with our ambition to grow our higher revenue margin third party business. Before handing over to Duncan, I would like to take a step back and reflect on the outcome of the plan we presented at the 2023 Capital Markets Day using slide number five. First, as I mentioned, we either met or exceeded our financial targets in terms of operating capital generation, free cash flow, dividend, and leverage. Second, at the same time, we have significantly transformed our business. We finished a year ahead of our target in terms of capital employed for the financial assets at $2.7 billion, and our U.S. strategic assets now significantly outweigh our U.S. financial assets, both in terms of CSM and capital employed. This is quite a remarkable shift. These are not only great achievements, but they also lay strong foundations for the next steps of our journey as we relocate to the United States while continuing to increase the profitability of the group and return capital to stockholders. I am very proud of all our colleagues across our businesses for contributing to our success. Well done, everyone. I will now hand over to Duncan to discuss our financial performance in more detail. Duncan, over to you.

Thank you, Lad. I will zoom in on our second half 2025 results starting on slide seven. The operating results increased by 11% year on year to $858 million with all of our businesses delivering higher figures. Operating capital generation increased by 8% with strong figures from Transamerica. Free cash flow in the second half of 2025 amounted to 388 million euros, and we received remittances from all units. Cash capital at holding decreased to 1.3 billion euro at the end of 2025, mostly because of capital distributions to shareholders in the form of dividend payments and share buybacks. Valuation equity per share increased by 60 cents, with a positive contribution from both shareholders' equity and the CSM balance after tax. Growth financial leverage was stable at 4.9 billion euros. Finally, the group solvency ratio remains robust at 184%. As announced in May last year, the eligibility of the perpetual cumulative subordinated bonds in our capital stack ended as of January the 1st, 2026, These bonds contributed 7 percentage points to the group solvency ratio as of December 31st, 2025. Now, using slide 8, I will address the development of our operating result in the second half of 2025. Starting with the U.S., the operating result increased by 5% in Euros, or 14% in U.S. dollars, thanks to a combination of growth and more favorable variances. The operating results of strategic assets increased by 10% in local currency and benefited from business growth, notably in the individual life and retirement plan businesses, partially offset by a lower operating margin in the distribution segment. In financial assets, the operating results increased because of more favorable experience variances compared to the second half of 2024. On the other units, the operating results of the UK increased benefiting from business growth and favorable markets, which led to both a higher CSM release and increasing non-insurance revenues in the second half. In the international segment, the increase of the operational result was also driven by business growth and a one-time item in China. Furthermore, the result from China benefited from a true-up related to the local implementation of IFRS 17, which was booked in the second half. Agon Asset Management's operating results improved in the global platforms business, mostly from the impact of favorable markets on revenues and from an improved operating margin. Looking forward, as mentioned at our recent Capital Markets Day, over the 2026 to 2027 period, we aim to grow the operating result of the group by around 5% per year from the 1.5 to 1.7 billion euro run rate in 2025 taking into account an assumed Euro-dollar exchange rate of 1.20. I now turn to slide nine. Here you see our IFRS net results for the second half of 2025. Non-operating items were unfavorable in the period and were largely driven by realized losses on assets transferred in the context of the SGUL reinsurance transaction. These realized losses were taken in the P&L were fully offset in other comprehensive income and therefore had no impact on the development of shareholders' equity. Net impairments reflect an ECL reserve increase from new investment purchases, as well as a small number of downgrades and defaults of bond investments. Fair value items were negative mostly from revaluations of solvency hedges in the U.K., and other charges were mostly driven by various items in the U.S. and U.K., and partially offset by the positive result from the stake in ASR. I am now on slide 10. In the second half of the year, our shareholders' equity grew by 2% and our CSM balance increased by 4% over the same period. The increase in the CSM was largely from business growth in the U.S. strategic assets, which saw a 24% increase in CSM in the second half thanks to profitable new business, favorable assumption changes, and experience variances. The CSM of our financial assets decreased due to the runoff of the book as well as the impact of the SGOL reinsurance transaction. These developments mean that the CSM balance of our strategic assets now accounts for 57% of total America's CSM. Outside the US, the changes to the total CSM balance were limited. Overall valuation equity per share, which represents shareholders' equity plus net of tax CSM, increased by 7 percentage points over the second half of 2025 to €9.06 per share. Moving now to slide 11. OCG before holding, funding, and operating expenses increased by 8% compared to the second half of 2024. OCG from the U.S. increased by 19% or 27% in U.S. dollars over the same period with a higher contribution from both the strategic and financial assets. Mortality and morbidity claims experience was favorable in the second half of 2025 while it was unfavorable in the prior year period. OCG benefited also from a favourable release of required capital from the investment portfolio actions and a reduction in short-term financing. This was partly offset by a higher new business strain from growing our strategic assets. Adjusting for favourable items, the US OCG in the second half of 2025 fell within the guidance of $200 to $240 million per quarter. In the UK, OCG decreased OCG decreased mostly because of the second half of 2024 includes some favorable items, while the international segment reported lower OCG. At Aegon Asset Management, OCG increased due to favorable markets and an improved operating margin compared to the prior year period. Holding, funding, and operating expenses were largely unchanged year over year at 142 million euros bringing the total for full year 2025 to 295 million euros. As a result, OCG after holding funding and operating expenses for the full year 2025 amounted to 992 million. I'm now turning to slide 12. The capital positions of our business units remain strong and well above their respective operating levels. The U.S. RBC ratio increased by 4 percentage points compared with June 2025 to 424%. The increase was driven by OCG from the operating entities applying the RBC framework. This was partly offset by remittances to the holding. One-time items and management actions negatively impacted the RBC ratio by 3 percentage points during the period. The negative impact on the RBC ratio of the SGUL reinsurance transaction was offset by capital investment into Transamerica from the group. Market movements had a limited impact. In the UK, the solvency ratio of Scottish Equitable decreased by two percentage points to 183%. Operating capital generation in the period was offset by remittances to the holding and investments in the business. Market movements here also had a limited impact. On slide 13, you see that cash capital holding has come down in the second half of 2025 to 1.3 billion euros. This development is consistent with our aim to reach the midpoint of the operating range for cash capital holding around 1.0 billion euros by the end of 2026. Free cash flow amounted to 388 million euros in the period and included remittances from all our units, as well as dividends received from our stake in ASR. The full year 2025 free cash flow amounted to 829 million euros, consistent with our target of around 800 million euros for the year. We returned nearly a billion euros of capital to our shareholders through dividends and share buybacks in this period. Consequently, our share count ended 2025, 5% lower than at the start of the year. Capital injections into the businesses amounted to 751 million euros, and mostly related to the investment in Transamerica to offset the impact of the SGL reinsurance transaction. This is funded by the disposal of part of our ASR stake, 12.5 million shares, as indicated at our capital markets day. The remainder mostly related to investments in our international investment management businesses and in Aegon Asset Management. We have already launched a share buyback for the first half of 2026, totaling 227 million euro, and expect this to be completed on or before June the 30th, barring unforeseen circumstances. This share buyback covers both the first half of the 400 million program for 2026 announced at the Capital Markets Day, and 27 million related to share-based compensation plans. After completing this first part, we expect to launch the second half of the 400 million Euro program. I am now moving to my final slide, number 14. To conclude, The results over the second half of 2025 were strong, and we are confident we are well positioned to meet our growth ambitions for 2026 and 2027. As discussed at our 2025 Capra Markets Day, the next time we present our results will be in August with the first half figures. We will also move the timing of our results conference call to 2 p.m. Central European time to accommodate U.S.-based investors. With that, I would now like to open the call for questions. Please limit yourself to two questions per person. Operator, please open the Q&A session.