Aegon reinsures more longevity exposure in the Netherlands
December 15 2021 - 2:00AM
The Hague, December 15, 2021 - Aegon today announces that
it has reinsured an additional part of its longevity exposure in
the Netherlands with Reinsurance Group of America, Incorporated
(RGA). This transaction improves the risk profile of the Dutch Life
business and releases capital at attractive terms. As a result of
actions taken over the past year, Aegon expects to increase the
regular remittances from this business.
The reinsurance agreement provides protection against the
longevity risk associated with EUR 7 billion of pension
liabilities. The risk transfer is effective per December 31, 2021
and will continue until the reinsured block of business has run off
in full. The transaction includes deferred pensioners as well as
in-payment policies of pensioners and dependents, leading to a very
long run-off period. This reinsurance protects Aegon against the
potential adverse financial impact of longevity risk over the full
life of the policies at an attractive cost of capital. The
transaction follows a similar longevity reinsurance structure
executed by Aegon in December 2019. Together, these agreements
mitigate approximately 40% of the longevity risk exposure of the
Dutch life business. These reinsurance agreements have no impact on
the services and guarantees that Aegon provides to its
policyholders.
“This longevity reinsurance agreement is another bilateral
action taken to maximize the value of our Dutch Life business,”
says Lard Friese, CEO of Aegon N.V. “In line with our strategy,
this builds on actions we have previously taken to improve the risk
profile of this business and is another step to generate stable,
regular, and reliable cash flows from the Dutch Life business.”
The benefit to the Dutch Life business Solvency II ratio is
expected to be around 15%-points. This corresponds to an
approximate 5%-point increase in the Group’s Solvency II ratio.
Operating capital generation of the Dutch Life business will
initially be reduced by EUR 40 million per year and the
IFRS operating result will decrease by less than
EUR 15 million per year. The impact on operating capital
generation and the operating result will decrease over time in line
with the maturity of the reinsured portfolio.
Aegon expects to increase the regular quarterly remittances of
the Dutch Life business from EUR 25 million to
EUR 50 million per quarter as of the first quarter of
2022. This follows management actions taken over the past year to
strengthen the capital position, improve the risk profile, and
increase capital generation.
About Aegon
Aegon’s roots go back more than 175 years – to the first half of
the nineteenth century. Since then, Aegon has grown into an
international company, with businesses in the Americas, Europe, and
Asia. Today, Aegon is one of the world’s leading financial services
organizations, providing life insurance, pensions, and asset
management. Aegon’s purpose is to help people achieve a lifetime of
financial security. More information on aegon.com.
Contacts |
|
Media
relations |
Investor
relations |
Dick
Schiethart |
Jan
Willem Weidema |
+31(0) 70 344
8821 |
+31(0) 70 344
8028 |
dick.schiethart@aegon.com |
janwillem.weidema@aegon.com |
Forward-looking statementsThe statements
contained in this document that are not historical facts are
forward-looking statements as defined in the US Private Securities
Litigation Reform Act of 1995. The following are words that
identify such forward-looking statements: aim, believe, estimate,
target, intend, may, expect, anticipate, predict, project, counting
on, plan, continue, want, forecast, goal, should, would, could, is
confident, will, and similar expressions as they relate to Aegon.
These statements are not guarantees of future performance and
involve risks, uncertainties and assumptions that are difficult to
predict. Aegon undertakes no obligation to publicly update or
revise any forward-looking statements. Readers are cautioned not to
place undue reliance on these forward-looking statements, which
merely reflect company expectations at the time of writing. Actual
results may differ materially from expectations conveyed in
forward-looking statements due to changes caused by various risks
and uncertainties. Such risks and uncertainties include but are not
limited to the following:
- Changes in general economic and/or governmental conditions,
particularly in the United States, the Netherlands and the United
Kingdom;
- Changes in the performance of financial markets, including
emerging markets, such as with regard to:
- The frequency and severity of defaults by issuers in Aegon’s
fixed income investment portfolios;
- The effects of corporate bankruptcies and/or accounting
restatements on the financial markets and the resulting decline in
the value of equity and debt securities Aegon holds; and
- The effects of declining creditworthiness of certain public
sector securities and the resulting decline in the value of
government exposure that Aegon holds;
- Changes in the performance of Aegon’s investment portfolio and
decline in ratings of Aegon’s counterparties;
- Lowering of one or more of Aegon’s debt ratings issued by
recognized rating organizations and the adverse impact such action
may have on Aegon’s ability to raise capital and on its liquidity
and financial condition;
- Lowering of one or more of insurer financial strength ratings
of Aegon’s insurance subsidiaries and the adverse impact such
action may have on the written premium, policy retention,
profitability and liquidity of its insurance subsidiaries;
- The effect of the European Union’s Solvency II requirements and
other regulations in other jurisdictions affecting the capital
Aegon is required to maintain;
- Changes affecting interest rate levels and continuing low or
rapidly changing interest rate levels;
- Changes affecting currency exchange rates, in particular the
EUR/USD and EUR/GBP exchange rates;
- Changes in the availability of, and costs associated with,
liquidity sources such as bank and capital markets funding, as well
as conditions in the credit markets in general such as changes in
borrower and counterparty creditworthiness;
- Increasing levels of competition in the United States, the
Netherlands, the United Kingdom and emerging markets;
- Catastrophic events, either manmade or by nature, including by
way of example acts of God, acts of terrorism, acts of war and
pandemics, could result in material losses and significantly
interrupt Aegon’s business;
- The frequency and severity of insured loss events;
- Changes affecting longevity, mortality, morbidity, persistence
and other factors that may impact the profitability of Aegon’s
insurance products;
- Aegon’s projected results are highly sensitive to complex
mathematical models of financial markets, mortality, longevity, and
other dynamic systems subject to shocks and unpredictable
volatility. Should assumptions to these models later prove
incorrect, or should errors in those models escape the controls in
place to detect them, future performance will vary from projected
results;
- Reinsurers to whom Aegon has ceded significant underwriting
risks may fail to meet their obligations;
- Changes in customer behavior and public opinion in general
related to, among other things, the type of products Aegon sells,
including legal, regulatory or commercial necessity to meet
changing customer expectations;
- Customer responsiveness to both new products and distribution
channels;
- As Aegon’s operations support complex transactions and are
highly dependent on the proper functioning of information
technology, operational risks such as system disruptions or
failures, security or data privacy breaches, cyberattacks, human
error, failure to safeguard personally identifiable information,
changes in operational practices or inadequate controls including
with respect to third parties with which we do business may disrupt
Aegon’s business, damage its reputation and adversely affect its
results of operations, financial condition and cash flows;
- The impact of acquisitions and divestitures, restructurings,
product withdrawals and other unusual items, including Aegon’s
ability to integrate acquisitions and to obtain the anticipated
results and synergies from acquisitions;
- Aegon’s failure to achieve anticipated levels of earnings or
operational efficiencies, as well as other management initiatives
related to cost savings, cash capital at Holding, gross financial
leverage and free cash flow;
- Changes in the policies of central banks and/or
governments;
- Litigation or regulatory action that could require Aegon to pay
significant damages or change the way Aegon does business;
- Competitive, legal, regulatory, or tax changes that affect
profitability, the distribution cost of or demand for Aegon’s
products;
- Consequences of an actual or potential break-up of the European
monetary union in whole or in part, or the exit of the United
Kingdom from the European Union and potential consequences if other
European Union countries leave the European Union;
- Changes in laws and regulations, particularly those affecting
Aegon’s operations’ ability to hire and retain key personnel,
taxation of Aegon companies, the products Aegon sells, and the
attractiveness of certain products to its consumers;
- Regulatory changes relating to the pensions, investment, and
insurance industries in the jurisdictions in which Aegon
operates;
- Standard setting initiatives of supranational standard setting
bodies such as the Financial Stability Board and the International
Association of Insurance Supervisors or changes to such standards
that may have an impact on regional (such as EU), national or US
federal or state level financial regulation or the application
thereof to Aegon, including the designation of Aegon by the
Financial Stability Board as a Global Systemically Important
Insurer (G-SII); and
- Changes in accounting regulations and policies or a change by
Aegon in applying such regulations and policies, voluntarily or
otherwise, which may affect Aegon’s reported results, shareholders’
equity or regulatory capital adequacy levels.
Further details of potential risks and uncertainties affecting
Aegon are described in its filings with the Netherlands Authority
for the Financial Markets and the US Securities and Exchange
Commission, including the Annual Report. These forward-looking
statements speak only as of the date of this document. Except as
required by any applicable law or regulation, Aegon expressly
disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements contained
herein to reflect any change in Aegon’s expectations with regard
thereto or any change in events, conditions or circumstances on
which any such statement is based.
- 20211215 - PR - Aegon reinsures more longevity exposure in the
Netherlands
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