Aegon Ltd. — 2023 Form 20-F summary
Reporting period: Fiscal year ended December 31, 2023. This is an annual report, not a standalone fourth-quarter filing; the supplied text does not provide separate Q4 results. Financial statements are prepared under IFRS as issued by the IASB. Aegon adopted IFRS 17 and IFRS 9 in 2023 and restated 2022 comparatives; 2021 figures generally are not comparable on the same basis.
Business context
Aegon is an international insurer, retirement and investment-services provider, with wholly owned businesses principally in the United States and United Kingdom, a global asset manager, and insurance and asset-management partnerships. In July 2023 it completed the combination of its Dutch insurance, pension, banking and mortgage activities with a.s.r., receiving EUR 2.2 billion in cash and a 29.99% strategic stake. Aegon redomiciled to Bermuda in September; it retained its Netherlands headquarters and Dutch tax residence. Group supervision transferred to the Bermuda Monetary Authority (BMA) on October 1.
Key financial and operating metrics
| Metric | 2023 | 2022 |
|---|---|---|
| IFRS insurance revenue | EUR 10.386 billion | EUR 11.251 billion |
| Insurance service result | EUR 342 million | EUR 430 million |
| Net investment result | EUR (139) million | EUR 329 million |
| Operating result, non-IFRS | EUR 1.498 billion | EUR 1.802 billion |
| Net result | EUR (199) million | EUR (540) million |
| Operating cash flow | EUR 864 million | EUR 2.672 billion |
| Free cash flow, non-IFRS | EUR 715 million | EUR 780 million |
| Operating capital generation | EUR 1.280 billion | Not stated as comparable in the supplied text |
| Addressable expenses, non-IFRS | EUR 2.519 billion | EUR 2.422 billion |
| Shareholders’ equity | EUR 7.475 billion | EUR 8.815 billion |
| Gross financial leverage | EUR 5.064 billion | EUR 5.621 billion |
| Cash Capital at Holding | EUR 2.387 billion | EUR 1.614 billion |
| Group solvency ratio | 193% | 208% |
| Revenue-generating investments | EUR 826 billion | Not stated here |
| Aegon Asset Management assets under management | EUR 305 billion | EUR 293 billion |
The IFRS income statement reports an operating loss before tax of EUR 391 million from continuing operations and an income tax benefit of EUR 209 million. The reported net loss includes discontinued operations. The filing reports a non-IFRS return on equity of 14.7% for 2023 versus 13.0% for 2022; the filing’s definition uses operating result after tax and interest on financial leverage, rather than net income.
Operating cash flow, investing cash flow and financing cash flow were EUR 864 million, EUR (1.996) billion and EUR (3.241) billion, respectively. Cash and cash equivalents ended the year at EUR 4.074 billion, down from EUR 8.486 billion at the start of 2023; the reported decrease includes substantial insurance-related and investment cash-flow movements.
Capital ratios at year-end were 432% for the US RBC ratio (425% in 2022) and 187% for Scottish Equitable plc’s UK Solvency II ratio (169%). Both exceeded stated operating levels of 400% and 150%, respectively. Cash Capital at Holding of EUR 2.387 billion was above Aegon’s EUR 0.5–1.5 billion operating range.
Material changes versus the prior comparable period
- Operating result declined 17%, primarily reflecting lower Americas investment results, management actions, and one-time benefits in 2022. The Americas operating result fell 23%; UK operating result rose 1%; Asset Management fell 25%; International fell 3%.
- Net loss improved from EUR 540 million to EUR 199 million, largely because the 2022 loss included a substantial impairment related to classifying Aegon the Netherlands as held for sale.
- Other charges were EUR 1.140 billion, including EUR 961 million in the Americas. The latter included EUR 515 million of assumption and model updates and EUR 446 million of restructuring, operating-model investment, litigation-provision adjustments and other items.
- Realized losses on investments were EUR 659 million, mainly in the Americas. The filing says the US realized losses were offset by gains in other comprehensive income and had no impact on shareholders’ equity.
- Operating expenses increased 2% to EUR 3.307 billion; addressable expenses rose 4% on a constant-currency basis to EUR 2.519 billion.
- The a.s.r. transaction and related buyback were major capital events. Aegon returned EUR 1.525 billion through dividends and buybacks in 2023; 54% of the EUR 1.5 billion buyback program was complete at year-end. A separate EUR 200 million buyback was completed in the first half.
Outlook, management commentary and risks
Management said 2023 commercial momentum was strong in US strategic assets, UK workplace, and partnerships in Brazil and China, while UK retail and asset-management activity faced challenges from macroeconomic conditions. It highlighted elevated inflation, interest-rate volatility, geopolitical instability and market uncertainty. Management said business units remained well capitalized and holding-company cash was strong.
For 2025, Aegon targets approximately EUR 1.2 billion of operating capital generation, EUR 800 million of free cash flow, gross financial leverage of around EUR 5.0 billion, and a dividend of around EUR 0.40 per common share, barring unforeseen circumstances and subject to applicable approvals. The proposed 2023 final dividend is EUR 0.16 per common share, bringing the stated full-year total to EUR 0.30, compared with EUR 0.23 for 2022.
Transamerica’s strategy emphasizes US middle-market growth and reallocating capital from lower-return Financial Assets to Strategic Assets. Management targets 110,000 World Financial Group agents by 2027, up from 73,719 at year-end 2023. Aegon also aims to reduce gross financial leverage by up to EUR 700 million following the a.s.r. transaction; EUR 500 million had been implemented by year-end.
- Insurance and market risks: Results and capital remain sensitive to interest rates, equity and credit markets, mortality, morbidity, longevity, policyholder behavior, inflation and expense assumptions. The company’s risk disclosures note that combined shocks may be more severe than individual sensitivities imply.
- Long-term care: Transamerica removed its remaining morbidity-improvement assumption and increased its inflation assumption. It set a USD 700 million target for additional actuarially justified premium increases; approvals since the beginning of 2023 totaled USD 245 million.
- Litigation and contingencies: A pending Iowa case concerning universal-life monthly deduction rate increases has an exposure Aegon says it cannot reliably estimate. A settlement in a US agent classification case is subject to court approval. Year-end provisions included EUR 65 million for litigation, mainly related to a US settlement.
- Regulatory and structural change: Bermuda group supervision is in a transition period through 2027, during which the group solvency calculation is broadly aligned with the former Solvency II approach. Aegon identifies continuing regulatory, legal, tax, cybersecurity, data-privacy, third-party, climate and geopolitical risks.
- Transactions after year-end: Aegon completed the sale of its 56% stake in Aegon Life Insurance Company in India on February 23, 2024. The UK individual-protection portfolio transfer to Royal London remained subject to a court-sanctioned Part VII transfer in 2024.
The auditor issued unqualified opinions on the consolidated financial statements and internal control over financial reporting. The auditor identified critical audit matters involving the valuation and accounting of the a.s.r. stake and the valuation of certain insurance-contract assets and liabilities.
Most important facts for investors to verify
- Reconcile operating result and free cash flow to IFRS measures, and assess how IFRS 17/IFRS 9 adoption and the limited restatement of comparatives affect trend analysis.
- Review the a.s.r. stake’s carrying value, valuation assumptions, governance rights, dividend contribution and potential sensitivity to a.s.r.’s share price.
- Confirm the completion, cost and share-count impact of the EUR 1.5 billion buyback, the additional EUR 35 million buyback for incentive-plan dilution, and the proposed final dividend.
- Assess the reasons Cash Capital at Holding remains above its stated operating range and the implications for capital distributions, debt reduction and liquidity.
- Monitor US and UK regulatory capital ratios, the BMA transition to its full solvency framework after 2027, and the extent to which units can remit capital to the holding company.
- Track Transamerica’s execution of its growth and de-risking plans, including WFG agent growth, long-term-care rate approvals, and reduction of capital employed in Financial Assets.
- Review the status and possible financial impact of the pending universal-life litigation and the agent-classification settlement, including court approval and any changes to provisions.
- Verify that the proposed 2025 financial targets remain achievable and assess the sensitivity of those targets to markets, policyholder behavior, assumptions and transaction-related cash flows.