Executive Summary / Key Takeaways

• Aegon is undergoing a profound transformation, pivoting its strategic focus towards its dominant U.S. operations, which now constitute 70% of its business, and is reviewing a potential head office relocation to the U.S. to simplify its corporate structure and align with its primary market.
• The company demonstrated strong financial performance in the first half of 2025, with operating results up 19% to EUR 845 million, driven by profitable business growth and improved claims experience, while maintaining a firm commitment to its 2025 financial targets.
• Aegon is actively managing its capital, increasing its interim dividend to EUR 0.19 per share and expanding its share buyback program to EUR 400 million for H2 2025, consistent with its plan to reduce cash capital at holding to around EUR 1 billion by the end of 2026.
• Technological differentiators, such as a fully digital experience for life insurance products and growing RILA sales, are driving commercial momentum and market share gains, particularly within its Transamerica Protection Solutions segment.
• Despite strong operational momentum, the company faces competitive pressures in certain segments and ongoing challenges in shrinking its financial assets portfolio, necessitating continued strategic actions and disciplined capital deployment.

Aegon's Strategic Evolution: A Transatlantic Reorientation

Aegon Ltd., a venerable financial services holding company founded in 1844, is in the midst of a significant strategic metamorphosis, reorienting its global footprint and operational focus. The company's overarching ambition is to cultivate leading businesses in investment, protection, and retirement solutions across its chosen markets. This transformation, initiated in 2020 under CEO Lard Friese, has seen Aegon streamline its portfolio, culminating in pivotal moves such as the combination of its Dutch business with ASR Nederland N.V. (ASRNL) in July 2023 and the transfer of its group supervision to the Bermuda Monetary Authority. The most recent and perhaps most impactful development is the announced review of a potential relocation of its legal domicile and head office to the United States, a move that underscores the increasing centrality of its U.S. operations, Transamerica, which now accounts for approximately 70% of the group's business.

This proposed relocation is a logical step designed to simplify Aegon's corporate structure, aligning its legal domicile, tax residency, accounting standards, and regulatory framework with its largest market. Such a realignment is expected to foster closer cooperation between the holding company and its primary business unit, thereby enabling long-term growth. As part of this review, Aegon has already commenced preparations for implementing U.S. GAAP reporting, a complex process anticipated to take two to three years. This strategic pivot is not driven by regulatory pressure but by a deliberate choice to lean into the reality of its business footprint and leverage the advantages of being a U.S.-based company, including evaluating the impact on its New York Stock Exchange listing.

Competitive Dynamics and Technological Edge

Aegon operates in a highly competitive global financial services landscape, vying with industry giants such as Prudential Financial ($PRU), MetLife ($MET), American International Group ($AIG), and Lincoln National Corporation ($LNC). In this environment, Aegon's strategic focus on digital innovation and niche product differentiation serves as a crucial competitive advantage. For instance, in its U.S. Protection Solutions segment, the successful launch of a fully digital experience for a whole life final expense product has been a key driver of strong new life sales in the brokerage channel. This digital capability offers tangible benefits, including notably faster processing for customers, which can enhance customer engagement and potentially lead to stronger customer loyalty and recurring revenue streams. This technological edge allows Aegon to differentiate itself in tech-savvy segments and improve operational efficiency, contributing to increased revenue opportunities.

While Aegon's digital banking solutions and tailored retirement offerings provide greater efficiency in customer service delivery and long-term planning tools, it faces formidable competitors with broader scale and entrenched market positions. Prudential Financial, for example, boasts an extensive global reach and established brand, often demonstrating greater efficiency in product distribution. MetLife's larger scale provides qualitative advantages in cost efficiency and market penetration, while AIG's global presence and risk management capabilities are significant. Lincoln National, though more U.S.-centric, excels in product innovation. Aegon's emphasis on stable value solutions and voluntary employee benefits, coupled with its digital prowess, helps it carve out market share, particularly in areas where competitors might offer less personalized or slower digital services. However, Aegon acknowledges that it lags in overall market share capture and innovation speed compared to some larger rivals, necessitating continuous investment in R&D and operational execution.

Financial Performance and Operational Momentum

Aegon's first half of 2025 results underscore the positive trajectory of its transformation strategy. The company reported an operating result of EUR 845 million, a robust 19% increase year-over-year. This growth was primarily attributed to profitable business expansion and a reduction in unfavorable claims experience across its U.S., U.K., and International segments. The U.S. operations, particularly Transamerica, were a significant contributor, with operating results materially improving to EUR 685 million, well within the guided range of EUR 650 million to EUR 750 million. This improvement was largely driven by growth in strategic assets, notably Protection Solutions.

Operating capital generation (OCG) before holding and funding expenses, however, saw a slight decrease of 2% to EUR 576 million in the first half of 2025. This was mainly due to increased new business strain, particularly in U.S. strategic assets, reflecting the company's investment in growing these profitable segments. Despite this, management views higher new business strain as a positive indicator of "planting seed corn" for future capital generation. The U.S. RBC ratio, a key measure of capital strength, decreased by 23 percentage points to 420%, impacted by market movements and one-time items, but remains robust and above its operating level.

Aegon's commitment to shareholder returns is evident in its capital management framework. Cash capital at the holding company stands at over EUR 2 billion, following planned remittances and the completion of a EUR 150 million share buyback in the first half of 2025. The company increased its interim dividend by EUR 0.03 to EUR 0.19 per common share and announced a EUR 200 million increase to its ongoing share buyback program, bringing the total for the second half of 2025 to EUR 400 million. This aligns with Aegon's plan to reduce cash capital at holding to around EUR 1 billion by the end of 2026. Free cash flow for the first half of 2025 significantly increased to EUR 442 million from EUR 373 million in the prior year.

Segmental Highlights and Strategic Initiatives

Within the Americas, World Financial Group (WFG) continues to be a vital distribution channel, with licensed agents increasing by 14% to over 90,000 in H1 2025, driven by successful recruiting and improved retention. This higher agent productivity contributed to a 13% increase in new life sales for the Individual Life business. The RILA product also demonstrated steady growth, with net deposits nearly doubling year-over-year. In Savings & Investments, solid net deposits in retirement plans were driven by midsized plans, supported by a large pooled plan onboarding of EUR 1.9 billion.

The Aegon U.K. business continues to progress its strategy to become a champion in the savings and retirement market. The Workplace platform benefited from the onboarding of a larger scheme in H1 2025, maintaining strong commercial momentum. However, the Adviser platform continues to be adversely impacted by ongoing consolidation and vertical integration in non-target segments. In the International segment, joint ventures in Brazil, China, Spain, and Portugal all generated higher new life sales, though this was partially offset by lower sales at TLB (Singapore/Hong Kong) due to competitive landscape changes. Aegon Asset Management reported solid third-party net deposits, with alternative fixed income products driving Global Platforms' deposits and the Chinese joint venture contributing to Strategic Partnerships' deposits.

A key operational detail in H1 2025 was the extension of the dynamic hedge program for variable annuities to cover 25% of the base fee exposure. This action further reduces Aegon's economic equity market exposure and capital requirements, although it will have a small negative impact on run rate OCG. This proactive risk management demonstrates Aegon's commitment to stabilizing the capital generation and earnings profile of its legacy variable annuity book, which is in runoff.

Outlook and Risks

Aegon remains confident in achieving all its financial targets for 2025, including an OCG of around EUR 1.2 billion and a free cash flow of approximately EUR 800 million. The company's U.S. operating results guidance has been increased by $50 million to EUR 700 million to EUR 800 million for the second half of 2025, while the group guidance remains at EUR 750 million to EUR 850 million, reflecting current exchange rates. Management anticipates continued business growth in strategic assets and disciplined expense management.

However, the outlook is not without risks. The potential head office relocation to the U.S. is a complex undertaking, with the implementation of U.S. GAAP reporting alone expected to take 2-3 years. This transition requires careful management of head office processes and stakeholder engagement. While Aegon is not particularly equity sensitive, with OCG sensitive by plus or minus 10% to around USD 40 million, market volatility, as experienced in April 2025, can still lead to impacts from hedging rebalancing and cross effects on the U.S. RBC ratio. The company also continues to manage its financial assets, aiming to reduce capital employed to $2.2 billion by the end of 2027 through unilateral, bilateral, and potentially third-party actions. Challenges such as unfavorable reserve changes from premium variances in the Universal Life block, though lessening, persist. Furthermore, competitive pressures, changes in interest rates, and geopolitical tensions remain ongoing risks that could impact financial performance.

Conclusion

Aegon is executing a bold and transformative strategy, with its proposed U.S. head office relocation signaling a decisive commitment to its largest and most dynamic market. The company's strong financial performance in the first half of 2025, marked by increased operating results and robust capital management, demonstrates the efficacy of its strategic pivot towards profitable growth in strategic assets. Aegon's technological differentiators, particularly in digital life insurance and RILA products, are proving instrumental in driving commercial momentum and enhancing its competitive standing.

While the path ahead involves complex operational and accounting transitions, Aegon's management has articulated clear financial targets and a disciplined approach to capital deployment, including significant shareholder returns. The ongoing efforts to de-risk and shrink financial assets, coupled with strategic investments in growth areas, position Aegon to unlock further value. The successful integration of its U.S. operations and the continued leverage of its digital capabilities will be critical in solidifying its competitive moat and driving sustainable long-term growth in a constantly evolving financial services landscape.