Aegon Ltd. 2024 Financial Condition Report Summary
Business Context and Reporting Period
This Form 6-K incorporates Aegon Ltd.'s 2024 Financial Condition Report (FCR), covering the period from January 1, 2024, to December 31, 2024. Aegon is an international financial services group focused on life insurance, pensions, savings, asset management, and general insurance. Following its legal domicile transfer to Bermuda in September 2023, Aegon is supervised by the Bermuda Monetary Authority (BMA) as an Internationally Active Insurance Group (IAIG). The report utilizes a transition framework where Solvency II terminology is used until the end of 2027, after which the Bermudian solvency framework will be fully adopted.
Key Financial Metrics
Financial figures are presented in millions of Euros (EUR) unless otherwise stated.
| Metric | 2024 | 2023 |
|---|---|---|
| Insurance Revenue | 9,841 | 10,386 |
| Net Result (Continuing & Discontinued) | 676 | (199) |
| Operating Result | 1,485 | 1,498 |
| Eligible Own Funds | 14,030 | 14,250 |
| Solvency Capital Requirement (SCR) | 7,466 | 7,366 |
| Solvency Ratio | 188% | 193% |
| Cash Capital at Holding | 1,725 | 2,387 |
| Gross Financial Leverage | 5,200 | 5,100 |
Material Changes vs. Prior Period
- Profitability: Aegon returned to profitability with a net result of EUR 676 million in 2024, compared to a loss of EUR 199 million in 2023. This improvement was driven by a strong operating result and favorable market impacts, despite a decrease in insurance revenue.
- Capital Position: Eligible Own Funds decreased by EUR 220 million to EUR 14.03 billion. This reduction was primarily due to the redemption of EUR 700 million in subordinated notes, share buybacks totaling EUR 350 million (EUR 200 million completed in 2024 and EUR 150 million announced), and a fungibility haircut on the China joint venture. These were partially offset by positive market impacts and the stake in a.s.r.
- Solvency Ratio: The Group Solvency ratio decreased by 5 percentage points to 188%. The SCR increased by EUR 100 million, driven by new business and market factors.
- Liquidity: Cash Capital at Holding decreased to EUR 1.725 billion from EUR 2.387 billion, largely due to EUR 1.413 billion in capital returns to shareholders (dividends and buybacks).
Guidance, Outlook, and Risks
Management Commentary & Strategy: Aegon continues to focus on strengthening operational and financial performance while managing risks within its Enterprise Risk Management (ERM) framework. The company aims to maintain a Cash Capital at Holding range of EUR 0.5 billion to EUR 1.5 billion. Management actions in the US (Transamerica) included achieving 82% of the target for Long-Term Care rate increases and successfully purchasing 40% of institutionally owned universal life policies to reduce mortality risk.
Risks and Contingencies:
- Market Risk: Aegon is exposed to equity, interest rate, and credit risks. Sensitivity analysis indicates a 25% fall in equity markets would reduce the solvency ratio by 6%, while a 25% rise would reduce it by 13% due to variable annuity reserve flooring and deferred tax asset cliffs.
- Operational Risk: Key concentrations include processing risk in the Americas and UK, and IT/business disruption risk across all units. Emerging technologies, particularly AI, are increasing attention in risk management practices.
- Liquidity Risk: While liquidity remains strong, rapid interest rate rises could increase collateral requirements for derivatives.
Subsequent Events: A new EUR 150 million share buyback program commenced on January 13, 2025, expected to conclude by June 30, 2025. This includes a EUR 20 million participation by the largest shareholder, Vereniging Aegon.
Investor Verification Checklist
- Capital Adequacy: Verify the sustainability of the 188% solvency ratio given the recent decrease and the impact of the "DTA cliff" on US variable annuities.
- Shareholder Returns: Confirm the execution and completion of the new EUR 150 million share buyback program announced in January 2025.
- Regulatory Transition: Monitor the transition from Solvency II to the Bermuda Solvency framework, scheduled for full adoption after 2027.
- US Operations: Review the progress of Long-Term Care rate increases and the impact of the universal life policy purchase program on capital generation.
- China Exposure: Assess the impact of the fungibility cap on the China insurance joint venture (ATHTF) contribution to Group solvency.