Aegon 2H2019 (6 months) figures, y-o-y changes
- Underlying earnings before tax: EUR 963 million (-4.7%)
- Total gross deposits: EUR 79,655 million (+37.9%)
- New life sales: EUR 456 million (+14.6%)
- Americas: EUR 219 million (+5.3%)
- Europe: EUR 173 million (+25.4%)
- Asia: EUR 64 million (+23.1%)
- Net income: EUR 910 million (+259.7%)
New life sales rose by 15% to EUR 456 million. This was mainly driven by Europe, where pension sales in the Netherlands were strong following a pension buy-out deal and a purchase of additional yearly pension increases by an existing customer. The other main contributor was Asia, where Aegon's insurance joint venture in China increased sales as a result of a successful product launch, leveraging the platform of a large e-commerce partner.
New premium production for Accident & Health insurance increased by 19% to EUR 113 million. This was predominantly driven by the Americas as a result of onboarding a significant disability contract, which more than offset lower other workplace voluntary benefits sales and the previously announced strategic decision to exit certain products. Europe added to the increased production by a new accident product that was introduced in Spain. For property & casualty insurance, new premium production increased by 6% to EUR 64 million, driven by business growth in Spain.
Market consistent value of new business (MCVNB) decreased by 17% to EUR 195 million. The decline was largely due to Variable Annuities in the United States, reflecting the significant decline in interest rates, which led to negative margins. This was partially offset by higher MCVNB in the United Kingdom, primarily from higher margins on workplace business.
Aegon's underlying earnings before tax decreased by 5% to EUR 963 million compared with the second half of 2018. This was largely the result of negative impacts from lower interest rates, tighter credit spreads and portfolio updates on intangibles in the Americas. Underlying earnings before tax from Aegon's operations in Europe increased by 8% to EUR 437 million compared with the second half of 2018. The main contributor was the Netherlands. For Southern and Eastern Europe (SEE), earnings were stable despite the impact from the divestment of Aegon's businesses in the Czech Republic and Slovakia, which closed in January 2019.
Revenue-generating investments increased by 3% during the second half of 2019 to EUR 898 billion. This reflects primarily favorable market movements, which more than offset net outflows.
Realized gains on investments amounted to EUR 131 million, primarily reflecting gains in the Americas. These were largely due to bond calls and prepayments, mortgage loan gains, and normal trading activity.
Operating expenses increased by 5% to EUR 2,011 million. This mainly reflects investments to support growth and to build digital and technological capabilities, higher IFRS 9 / 17 implementation expenses, and higher restructuring cost.
Aegon's Group Solvency II ratio increased from 197% to 201% during the second half of 2019, and is now above the target zone of 150% - 200%. The ratio increased primarily due to strong normalized capital generation and the positive effect of management actions lowering the risk profile of the Group. The increase was partly offset by the external dividend payments, the negative impact of model and assumption changes, and the impact of a lower diversification benefit at Group level resulting from market movements and changes to hedging programs.
Alex Wynaendts, CEO of Aegon, commented on the results:
"In the second half of 2019 we continued to operate in a challenging environment. (...) We continue to execute on our strategy, simplifying Aegon's structure and becoming more proactive in managing our businesses. We have accelerated the release of capital from our mature businesses in the Netherlands by insuring the longevity risk associated with 12 billion euro of liabilities under Solvency II. Also, we completed the sale of our stake in our Japanese joint ventures with Sony Life in early 2020. In our growth businesses, we completed the Cofunds integration, thereby achieving the targeted expense savings and confirming our position as largest player in the UK platform market. Commercial momentum has improved with an increase in Life and Accident & Health sales, and higher gross deposits. (...) As a major investor, we also take our responsibility towards society, and we combine our promise of a secure and healthy financial future for our customers with caring about the environment. Our updated Responsible Investment Policy expands the criteria for excluding companies with coal-related activities from our investments."
More financial information about Aegon can be found at aegon.com/investors.