Aegon Earnings: Mainly on Track to Deliver on 2025 Financial Targets

Aegon has announced what we believe to be a good set of results for the first half of 2023. Financial targets for 2025 include a reduction in its leverage to around EUR 5 billion, an increase in operating capital generation to around EUR 1.2 billion, a growth of free cash flow to around EUR 800 million, and an increase in the annual dividend to around EUR 0.40 per share. With these six-month results, financial leverage now stands at EUR 5.6 billion, a 27.4% gross financial leverage ratio on Aegon’s definition of shareholders equity plus the contractual service margin, or CSM. Or, 40.7% of shareholders equity plus debt, which is better than our forecast. Further, Aegon has delivered EUR 620 million of operating capital generation, an increase of 13% from the same period last year. The business looks well placed on this 2025 target. The company is lagging a little bit in terms of its targeted free cash flow generation, with EUR 287 million in the first half. This free cash flow has led to the announcement of a EUR 0.14 interim dividend that the stock will trade with an ex-date of Aug. 29. On Sept. 27, this interim dividend will be paid. Consensus estimates as collected by Refinitiv are for a full-year dividend of EUR 0.30 per share. Aegon typically pays a little more, as it's final. This means, we believe, along with the EUR 1.5 billion buyback that is on target, distributions are on track.