AEGON N.V. — 2022 Form 20-F summary
Period and business: Annual report for the fiscal year ended December 31, 2022—not a standalone fourth-quarter filing. Aegon is an international insurer, retirement and investment-services group, reporting under IFRS as issued by the IASB. Its core markets are the United States, the Netherlands and the United Kingdom; it also operates in growth markets and through a global asset manager. The filing’s reporting scope changed: the Dutch business was classified as held for sale and discontinued operations under IFRS following the announced a.s.r. transaction.
Key financial metrics
| Metric | 2022 | Prior comparable period |
|---|---|---|
| IFRS total revenue | EUR 21.3 billion | EUR 21.1 billion in 2021 |
| Operating result (non-IFRS) | EUR 1.918 billion | EUR 1.906 billion in 2021 |
| Net result, continuing and discontinued operations | Loss of EUR 1.404 billion; loss attributable to Aegon N.V. owners was EUR 1.433 billion | Profit of EUR 2.029 billion; EUR 1.980 billion attributable to owners |
| Basic earnings per common share | Loss of EUR 0.73 | Profit of EUR 0.94 in 2021 |
| Operating cash flow | EUR 2.851 billion inflow | EUR 1.796 billion outflow in 2021 |
| Free cash flow | EUR 780 million | EUR 729 million in 2021 |
| Total assets | EUR 401.8 billion | EUR 468.3 billion at year-end 2021 |
| Shareholders’ equity | EUR 12.1 billion | EUR 23.8 billion at year-end 2021 |
| Cash Capital at Holding | EUR 1.6 billion | EUR 1.3 billion at year-end 2021 |
| Gross financial leverage | EUR 5.6 billion at reported exchange rates; EUR 5.4 billion at the exchange rate used for its target | EUR 5.9 billion at year-end 2021 |
| Group Solvency II ratio | 208%; own funds EUR 16.3 billion and SCR EUR 7.8 billion | 211%; own funds EUR 19.4 billion and SCR EUR 9.2 billion |
The filing does not provide a single comparable consolidated profit margin. Global Platforms operating margin was 11.9%, versus 12.6% in 2021. Balance-sheet cash and cash equivalents were EUR 3.4 billion, excluding assets held for sale; the cash flow statement reports EUR 8.5 billion including EUR 5.1 billion of cash classified in the Dutch disposal group.
Material changes versus 2021
- Operating result was broadly stable, as expense savings, growth initiatives, improved claims experience and a stronger US dollar were offset by lower fees associated with market declines and outflows.
- Net result swung from profit to loss. Non-operating items were a EUR 435 million loss, versus a EUR 1.352 billion gain in 2021; other charges rose to EUR 2.321 billion, chiefly reflecting an impairment on the Dutch business held for sale.
- Other comprehensive income was a EUR 9.545 billion loss, principally reflecting EUR 13.061 billion of losses on revaluation of available-for-sale investments. Higher interest rates also materially reduced reported shareholders’ equity.
- Net deposits/outflows across reported businesses were EUR 17.848 billion of outflows, compared with EUR 5.374 billion of net deposits in 2021. Asset Management operating result declined 24% to EUR 193 million, and assets under management fell to EUR 293 billion.
- New life sales rose 21% to EUR 825 million. Gross deposits fell 17% to EUR 194.3 billion.
- Gross financial leverage declined following a EUR 429 million debt tender offer. Aegon also completed a EUR 300 million share buyback following divestments; total 2022 shareholder distributions were reported as EUR 713 million.
Comparative figures were re-presented to classify Aegon the Netherlands as discontinued operations. Segment operating results use Aegon’s non-IFRS proportionate consolidation approach, so they should not be read as IFRS segment profit.
Outlook, management commentary and risks
- a.s.r. transaction: Aegon agreed to combine its Dutch pension, insurance, banking and mortgage activities with a.s.r. The company expects closing in the second half of 2023, subject to customary regulatory and antitrust approvals. Aegon expects EUR 2.2 billion gross cash proceeds and a 29.99% strategic stake in the combined company. It anticipates returning EUR 1.5 billion of cash proceeds to shareholders and reducing gross leverage by up to EUR 700 million, barring unforeseen circumstances.
- 2023 targets: Management expects at least EUR 1 billion of operating capital generation from units outside the Netherlands and approximately EUR 600 million of free cash flow, excluding Dutch remittances but including an expected interim dividend from a.s.r. Aegon targets a 2023 dividend of around EUR 0.30 per common share. A proposed 2022 final dividend of EUR 0.12 would bring the 2022 total to EUR 0.23 per share, subject to shareholder approval. A EUR 200 million share buyback was announced.
- Transformation: The operational improvement plan generated a EUR 627 million operating-result uplift by year-end 2022, exceeding the EUR 550 million 2023 target a year early. Expense initiatives produced EUR 366 million of savings versus 2019, or 92% of the EUR 400 million target. Aegon closed reporting on the program while retaining efficiency and growth as priorities.
- Market and insurance risks: Management cited inflation, sharply higher interest rates, wider credit spreads, lower equity markets and the war in Ukraine as pressures on results. Risks include credit, liquidity, interest-rate and currency exposures; mortality, morbidity, longevity and policyholder behavior; hedging and model assumptions; cyber and operational incidents; and regulatory change. US mortality experience remained affected by COVID-19, though claims declined from 2021.
- Contingencies and unusual items: The Dutch disposal generated a EUR 1.775 billion impairment in discontinued operations and a EUR 1.0 billion tax charge in the Dutch results, including a EUR 454 million anticipated tax-position settlement. Certain litigation remains unresolved, including US universal-life monthly deduction rate disputes and Dutch unit-linked product claims; the filing says it cannot estimate a range or maximum liability for some matters.
- Accounting transition: IFRS 17 and IFRS 9 applied from January 1, 2023. Aegon’s indicative estimate was an approximately EUR 12.6 billion reduction in opening shareholders’ equity for the comparative period, including a EUR 9.0 billion net reduction in revaluation reserves and an estimated EUR 11.8 billion pre-tax contractual service margin. The filing cautions that the transition estimate could change.
PwC issued unqualified opinions on the IFRS financial statements and internal control over financial reporting. Management also concluded that disclosure controls were effective at year-end.
Important facts for investors to verify
- Track completion of the a.s.r. transaction, final consideration and accounting, approvals, and the planned cash return and leverage reduction.
- Reconcile the reported net loss to the Dutch disposal impairment, market-related items, tax charge and large other-comprehensive-income loss; distinguish IFRS results from non-IFRS operating result.
- Confirm the final IFRS 17/IFRS 9 transition impact and whether the estimated opening-equity reduction changes as reporting is finalized.
- Monitor capital and liquidity after the Dutch business combination, including the 208% group solvency ratio, holding cash capital, leverage and restrictions on subsidiary remittances.
- Assess litigation provisions and developments in universal-life and unit-linked cases, as well as the sustainability of dividend, buyback and 2023 cash-flow targets.