Aegon H1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
August 21, 2025

Key Takeaways

  • Positive Sentiment: Operating result rose 19% to €845 million, driven by profitable business growth and improved claims experience in the US, UK and international segments.
  • Negative Sentiment: Operating capital generation before holding and funding expenses declined 2% year-on-year due to higher new business strain, particularly in US strategic assets.
  • Positive Sentiment: The company raised its interim dividend to $0.19 per share and increased its share buyback program by €200 million, targeting €400 million total in 2025 to return excess capital.
  • Positive Sentiment: Hedging of the variable annuity portfolio was extended to cover 25% of base fee exposure, further reducing downside equity market risk and stabilizing capital.
  • Neutral Sentiment: A review was launched to potentially relocate Aegon’s legal domicile and head office to the US, aiming to align tax, accounting and regulatory frameworks with its largest market.
AI Generated. May Contain Errors.
Earnings Conference Call
Aegon H1 2025
00:00 / 00:00

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Operator

Good day and thank you for standing by. Welcome to the AirCon First Half twenty twenty five Results Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please note that today's conference is being recorded.

Operator

I would now like to hand the conference over to your speaker, Yves Cormier, Head of Investor Relations. Please go ahead.

Yves Cormier
Yves Cormier
Global Head - IR at Aegon

Thanks operator and good morning everyone. Thank you for joining us for this conference call on first half year twenty twenty five results. I'm Yves Cormier, Head of Investor Relations And joining me today to take you through our progress are Aegon's CEO, Lars Frieser and CFO, Duncan Russell. Before we start, we would like to ask you to review our disclaimer on forward looking statements, which you can find at the end of the presentation. And with that, I would like to give the floor to Lars.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

Thank you, Yves, and good morning, everyone. I want to start today's presentation by informing you about the next steps in Aegon's transformation and running through our commercial developments before Duncan will address our results in more detail. So let me begin on slide number two with the key messages. Our strategy is to grow and transform our businesses, and we made good progress in doing so during the 2025. We are on track to deliver on our strategy and on all our targets.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

Our operating result was €845,000,000 up 19% compared with last year. This increase was mainly driven by profitable business growth and less unfavorable claims experience in The US, but also in The UK and in our international segment. Operating capital generation before holding and funding expenses amounted to €576,000,000 decreasing by 2% over the same period. New business strain increased, especially in our US strategic assets as we grew the business. Commercial momentum remains strong across our key markets, leading to higher new life sales and more net deposits.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

The capital position of our operating units remains strong and above their respective operating levels. Furthermore, in The US, we have extended the hedging of the variable annuity portfolio to cover part of the base fee exposure, which reduces our exposure to downward equity markets further. Cash capital at holding totals over €2,000,000,000 following the receipt of planned remittances from all our units, and the completion of €150,000,000 share buyback in the first half of the year. On the back of the solid performance, we have increased the interim dividend by $03 compared with last year to $0.19 per common share. Furthermore, today, announced a €200,000,000 increase to the current share buyback program, which began in July.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

In total, we will buy back €400,000,000 of shares during the 2025. This once again demonstrates our ongoing commitment to return excess capital to shareholders, unless we can invest it in value creating opportunities. And it is consistent with our plan to reduce our cash capital at holding to around 1,000,000,000 Euro by the 2026. Today, we are also announcing a review of potential relocation of our head office of The US. I will now move to slide number three to provide you with some background on this review.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

This is an important step in the transformation of our company. In recent years, Aegon's business in The United States, which accounts for approximately 70% of Aegon's operations, has become Aegon's primary market and central to the company's strategy and long term growth. A relocation of Aegon's legal domicile and head office to The United States is a logical step. It is expected to simplify Aegon's corporate structure, as it would align its legal domicile, tax residency, accounting standard, and regulatory framework with the geography where it conducts the majority of its business. Moreover, bringing the head office closer to our largest market allows much closer cooperation between the holding and its main business unit, which is an important enabler to grow successfully in the long term.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

As part of the review, we will evaluate the additional advantages that would come with being a US based company. This includes the impact on all of Aegon stakeholders and of making our listing on the New York Stock Exchange, a primary listing alongside our Euronext listing. Another key component of this review is the implementation of U. S. GAAP reporting, which is a complex process, which would likely take two to three years to complete.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

Preparations for the implementation have begun. We aim to share the outcome of this review at our Capital Markets Day on December 10. With that, I will now move on to slide number four to discuss our recent commercial performance, starting with The Americas. We continued to deliver on Transamerica's transformation, growing our strategic assets during the reporting period. World Financial Group recorded the 14% increase in its number of licensed agents to over 90,000, thanks to successful recruiting efforts and improved retention.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

The productivity of the agents selling life insurance products increased mainly from higher average premiums per policy. This offset a slight reduction in the number of multi ticket agents, while it led to an increase in Transamerica's market share in WFG's U. S. Life sales. This higher agent productivity at WFG was one of the key drivers of the 13% increase in new life sales in our individual life business.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

We also recorded strong growth of new life sales in the brokerage channel, driven by the successful launch of a fully digital experience of a whole life final expense product last autumn. Furthermore, we continue to see steady growth in the RILEH product, where net deposits nearly doubled compared with last year. In the savings and investment segment, we recorded solid net deposits in our retirement plan business over the reporting period. This was driven by mid sized plans, partly supported by the onboarding of a large pool plan. Written sales continue to be strong, which we see as a positive indicator for future growth of our book.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

Finally, we realized further growth in the general account stable value product and in IRAs as we work to increase profitability and diversify revenue streams in the retirement plan business. Let's move on to slide number five for an update on the other units. At Aegon UK, we continue to make progress on the strategy we presented at the teaching in June. Deposits in the workplace platform can be lumpy, and in this period we benefited from the onboarding of a larger scheme. The advisor platform business continued to be adversely impacted by ongoing consolidation and vertical integration in non target advisor segments.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

In the international segment, our joint ventures in Brazil, China, as well as Spain and Portugal, all generated higher new life sales. This was partially offset by lower sales at TLB, as a result of changes in the competitive landscape in Singapore. Aegon Asset Management reported solid third party net deposit during the reporting period. Net deposits in the global platforms business were mostly attributed to alternative fixed income products. Strategic partnerships net deposits were driven by a Chinese joint venture, which benefited from collaboration with the consumer finance platform.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

I will now hand over to Duncan to discuss our financial performance in more detail.

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

Thank you, Lars. Let me start with an overview on slide seven. In the 2025, the operating results increased by 19% year on year, mostly reflecting an improvement at Transamerica. Operating capital generation before holding, funding and operating expenses decreased by 2% over the same period, mainly driven by higher new business strength. Free cash flow in the 2025 amounted to €442,000,000 and this is a significant increase compared to the €373,000,000 generated last year.

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

Cash capital at holding remains very healthy, standing at €2,000,000,000 by the June, allowing us to announce an increase of our ongoing share buyback program. On a per share basis, valuation equity, which consists of the sum of shareholders' equity and the CSM balance after tax decreased by 5% in the period, mostly from the impact of unfavorable exchange rate movements on the group CSM, which are partly offset by a strong net result. Exchange rate movements were also the driver for the reduction of gross financial leverage. And lastly, the group solvency ratio decreased by five percentage points compared with year end 2024 to 183%, mainly from the new share buyback program and the reservation of the 2025 interim dividend. Using slide eight, I will address the development of our IFRS net results in the first half twenty twenty five.

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

The operating results amounted to EUR $845,000,000, coming in at the top end of the EUR $750,000,000 to EUR $850,000,000 run rate range we had indicated with the full year 2024 results. In The U. S, the operating results improved materially year on year to $685,000,000 within our guided range of $650,000,000 to $750,000,000 The result benefited from growth in our strategic assets, notably the Protection Solutions business with some offset in distribution where the operating margin fell in the 2025 as previously flagged as we invested further in the business. We had an improved result in financial assets because of less unfavorable experience variances from onerous contracts. Claims experience was largely offset by reserve releases, unfavorable reserve changes due to premium variances that we saw in The US in the 2024 continued into the 2025, as we previously flagged, but to a materially lesser degree.

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

The operating results of The UK increased benefiting from business growth and favorable markets. In the international segment, the operating result increased mainly from a higher CSM release in TLB and Spain and Portugal. Aegon Asset Management's operating results as well as that of the holding was broadly stable compared with the same period of last year. Moving on, non operating items were in aggregate favorable in the period, driven by hedging results recorded in fair value items. Other charges amounted to $2.00 €7,000,000 mostly because of the assumption updates in The U.

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

S. And at TLB to address the experience we have recently seen. Finally, we booked a EUR 50,000,000 contribution from our stake in ASR. Looking forward to the second half of the year, we are increasing our guided operating results range for The U. S.

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

By $50,000,000 to 700,000,000 to $800,000,000 but we're keeping the group guidance at $750,000,000 to €850,000,000 reflecting the current exchange rates. I'm now moving on to Slide nine. Based on the strong net result and a positive contribution of the assumption updates to OCI, shareholders equity increased slightly over the period. The CSM balance decreased over the period mostly because of unfavorable currency movements. In U.

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

S. Dollars, the CSM of our strategic assets in The U. S. Increased thanks to profitable new business, while the CSM of our financial assets decreased due to the runoff of the book, the impact of claims experience, as well as the impact of strengthening policyholder behavior assumptions. Outside The US, the changes to the total CSM balance were limited with The UK CSM decreasing modestly on a local currency basis and the International segment CSM increasing modestly from assumption updates.

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

Overall, valuation equity per share decreased by five percentage points over the 2025 to EUR8.47 per share, mostly due to the exchange rate developments. Slide 10. Operating capital generation or OCG decreased by 2% compared to the 2024. OCG from The U. S.

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

Decreased by 4% or 3% in U. S. Dollars. OCG from the strategic assets decreased as our investments in business growth drove higher new business strength. OTG from the financial assets increased mostly from higher fees as variable annuity account balances increased on the back of favorable markets. Furthermore, claims experienced in the period was less than favorable than the same period last year and included $86,000,000 of unfavorable mortality, largely related to the universal life book. Looking through the unfavorable claims experienced in the period, we continue to observe a quarterly OCG run rate for The Americas of around 200,000,000 to $240,000,000 The OCG benefited from favorable markets as well as favorable non recurring variances. The International segment reported lower OCG with improved underwriting experience in TLB being offset by lower OCG from China.

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

Aegon Asset Management's OCG was stable compared to the same period of last year. Looking ahead, we continue to expect OCG before holding, funding and operating expenses of around EUR 1,200,000,000.0 in 2025. I'm now turning to slide 11. The capital positions of our business units remained robust and above their respective operating levels. The U.

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

S. RBC ratio decreased by 23 percentage points compared with year end 2024 to 420%. Market movements had a 15 percentage points negative impact on this ratio. Of this, five percentage points was due to hedging, rebalancing and cross effects as a consequence of elevated market volatility in April, which we flagged with the first quarter trading update. The remaining unfavorable impact was largely driven by valuation moves in our alternative asset portfolio and lower interest rates.

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

One time items had a nine percentage points unfavorable impact due to restructuring costs, the annual actuarial assumption updates and several smaller items. For the remainder, operating capital generation in the period was offset by remittances to the group. Finally, in mid August, we decided to expand the dynamic hedge programme of our variable annuities to cover the equity market exposure of the fees of 25% of the base contracts. This represents an additional lever available to us to manage our risk profile going forward, reduces our economic equity market exposure on the VA block and thus capital requirement, and further solidifies the expected runoff profile, albeit with a small negative impact on run rate OCG. In The UK, the solvency ratio of Scottish Equitable decreased by one percentage point to 185% as operating capital generation in the period was offset by remittances and investments in the business.

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

Slide 12. Cash capital holding remained extremely healthy, standing at just over €2,000,000,000 Free cash flow amounted to €442,000,000 in the period and included remittances from all our units as well as capital returns from our stake in ASR. We returned €110,000,000 of capital to shareholders through share buybacks. And in addition we purchased €40,000,000 worth of shares, which will be used for share based compensation plans. Today we have announced a €200,000,000 increase of the currently ongoing share buyback program, bringing it to a total of €400,000,000 for the second half of the year.

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

Our objective remains to reach the midpoint of the operating range for cash capital at holding around €1,000,000,000 by the 2026. Let me conclude our presentation with the final slide on page 13. Taking into account our performance in the 2025 and the outlook for our businesses, we are on track to achieve all of our financial targets for 2025. We look forward to meeting you at the Capital Markets Day on December 10 in London. At the event, we will share the conclusion of the review regarding a potential relocation of Aegon's head office to The United States.

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

And with that, I would now like to open the call for questions. Please limit yourself to two questions per person. Operator, please open the Q and A session.

Operator

Thank will answer you. We will now go to the first question. And your first question today comes from the line of David Baumer, Bank of America. Please go ahead.

David Barma
David Barma
VP - Equity Research at Bank of America

Good morning. Thanks for taking my questions. To start with, can you talk about what drove the decision to cover 25 of the variable annuity based fee, please? Did you see that as the optimal balance between cost of protection? Or is it a first step and you'd like to do more over time?

David Barma
David Barma
VP - Equity Research at Bank of America

And I'll ask my second straightaway because it's linked to that. That combined with the measures taken on the universal life block will weigh on OCG going forward, but you've reiterated the guidance. We've been in a similar situation in the past two years with mortality first and then the drag in China both being offset by other measures. So I guess I'm trying to understand how reliant OCG is to the current level equities and to what extent stronger than expected business growth is making you comfortable with the OCG level that you're guiding for? If you can give a bit of color on that, please. Thank you.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

Thanks, David. Doug?

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

Yeah. Okay. So the VA based fee hedging, David, we executed upon that in recent days. Actually last week we executed upon it.

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

And that is an additional tool we brought into our toolkit to manage and stabilize the capital generation and the earnings profile of our Lexi variable, which is in runoff as you know. We did that for a number of reasons, partly to stabilize capital, partly to bring additional toolkit, partly because equity markets are at a good level. So it was just part of our normal ongoing management unilateral actions related to financial assets. The 25% again is a bit probably a bit of prudence on our side. We wanted to execute upon that, monitor how it works, make sure we understand it fully.

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

And then in the future, we fully have observed that we could increase it or decrease it depending on how we view things. And one thing we do have to balance and manage when we do these things is the impact of slowing on our capital position. So that is one thing which we'll continue to monitor. But the net net has reduced our underlying economic equity exposure on that vehicle, which I think is a good thing. In terms of OTG, actually it's a fairly clean quarter.

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

We've reiterated our guidance. If I take the actual reported OTG for the half year, add in our quarterly run rates, then we're still getting into our guided range of around 1,200,000,000.0 per year. Your comments on our equity sensitivity, actually we're not particularly equity sensitive. You can see the sensitivities in our balance sheets, which are not particularly large. And I think we've guided that our OCG is sensitive plus or minus 10% to around US40 million dollars So again, not particularly equity sensitive to be honest.

Operator

Thank you. Your next question comes from the line of Michael Huttner from Berenberg. Please go ahead.

Michael Huttner
Insurance Analyst at Berenberg

Hi there. I wanted to say it's almost like sounds like goodbye, the decision to and I take it as a decision if you've already started doing U. S. GAAP. It sounds to me like a decision.

Michael Huttner
Insurance Analyst at Berenberg

So first question then on the U. S. GAAP, can you as an indication, where will it land roughly relative to the operating profit or the OCG we've got already? And the other two, I know that it's more than two questions. Is the pool plan, how big it is?

Michael Huttner
Insurance Analyst at Berenberg

Because I guess it's around €2,000,000,000 but I don't know. And then also figures on the new business chain. Thanks. Owen, if I may, the economic exposure, VA benefit, how much does it reduce the capital required?

Lard Friese
Lard Friese
CEO & Chairman at Aegon

Okay, Michael, that's a number of questions. Let me confirm, it's $1,900,000,000 the cool plan that you're referring to as part of the retirement growth of net deposits in this half year. For the remainder, I hand over to you, Duncan.

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

Yeah, so hi Michael. On US GAAP, no, it's too early to tell. And I don't want to give any sort of guidance on that. It would be misleading at this stage, to be honest. Then on the capital requirement of the hedges, a small capital benefit.

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

We are reducing the equity exposure, which will reduce the required capital by a small amount in the third quarter.

Michael Huttner
Insurance Analyst at Berenberg

And the new business strain?

Lard Friese
Lard Friese
CEO & Chairman at Aegon

New business strain.

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

I'm not entirely sure what your question was on the business strain. But if I look in the quarter, new business strain was more or less as we anticipated, it was roughly 6,000,000 higher than our guided run rate in aggregate.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

Okay. Thank you.

Operator

Thank you. We will now take the next question. And the next question comes from the line of Farooq Hanif from JPMorgan. Please go ahead.

Farooq Hanif
Farooq Hanif
Head of European Insurance Equity Research at JP Morgan

Hi everybody. Just want to delve a little bit into your thinking on the re domiciliation because you've told us obviously that you've considered this in the past or it's been on the table, particularly when you move to, you know, your regulatory domicile to Bermuda. So, I mean, I get the point about it makes sense from the point of view of most of your business is obviously from The US. But I just want to understand what's changed, yeah, given that you, I believe that you've probably looked at this before. So, I mean, the things that come to my mind are, you know, regulators, you know, does it also make it easier for you to execute on some of your plans in The US?

Farooq Hanif
Farooq Hanif
Head of European Insurance Equity Research at JP Morgan

Would that be a factor that for example, you know, in terms of being able to use US GAAP and you know, and just being located there. I wonder if you'd be willing to just talk a little bit more about this. I mean, realize you're reviewing it all, but just some of other factors that are important. And then my, sorry, that was a very long question. Second question, how clean is your $8.45 operating profit?

Farooq Hanif
Farooq Hanif
Head of European Insurance Equity Research at JP Morgan

Can you I mean, you did quickly run Duncan run through some points, but how clean do you think it is?

Lard Friese
Lard Friese
CEO & Chairman at Aegon

Yeah, so Farooq, I will answer your first question, take it through the rationale and everything that you asked for. And then, but let's start to clear the question to Duncan on the financials, the second one.

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

Yes, Farooq, it's pretty clean. So we are happy with the first half IFRS operating profit. We reported $8.45 as you mentioned and I, there was still some negative variances. If we add back all those negative variances, which is roughly 92,000,000 for the group, we get to an adjusted number of around $9.37, which is strong. Having said that, as we flagged for the full year, we do have a recurring VA interest accretion, which is just up to say $3,035,000,000.

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

So underlying around 900,000,000 in the first half since then FX has weakened and hence we're coming back into around the $8.50 level, which is in the guided range. So a pretty good quarter, a pretty good half year for us to be honest.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

So, on the rationale and everything related to what you asked on the potential move to The US. There are a couple of things here. So the Aegon transformation, as we all know, is pretty profound. And we've done quite a number of steps over the last years to be where we are today. And we are now ready for this next step in the transformation.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

At the time that we were announcing the combination of our Dutch business with ASR, and then the subsequent closing of that in July, at the July 2023, we should all go back to that moment, because it was a very important moment. At that point in time, we were in the middle of implementing IFRS 17. We had just implemented IFRS 17, and we were in the middle of disclosing it for the first time. That's number one. So at that point in time, was not US GAAP available at all.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

That's number one. Number two, we were closing the transaction with ASR, which is a very comprehensive transaction. We needed to make sure that we embedded the group after that appropriately operationally. We also moved as D and B could no longer be had no legal basis any longer to maintain to be our group regulator. We moved our legal seat to Bermuda, and then subsequently the BMA became our regulator, and we wanted to embed everything appropriately.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

And let's also not forget that in that same period, because we closed the transaction the July 4, but in June, that's a couple of weeks earlier, two weeks earlier, we had a Capital Markets Day in London, where Transamerica was launching its strategy and its plan. And now we have two years behind us, and we can see how it's progressing. And at that time, we were at the start of that execution. And we are now two years further ahead, and we can now see that we have conviction that our US team is executing very well. And you can see that the growth, etcetera, is really coming through.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

And now The US business is 70% of the overall footprint of the group. So the reality is that we're now ready for this next phase of the transformation. We believe it is logical that if The US 70% of your business located in one of the thriving largest market in the world, it is clearly the locomotive, if you will, that is able to carry attitude to be the front part of the train that is Aegon Group. And as we aim to grow The US business in the future, we want to be closer to it. And moving our holding company to our largest market is a logical thing to do.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

So we're leaning in, that's what you're to a reality of our business. And at this point in time, are ready to do so. We have done a lot of work, but we aim to, we need to discuss in a public domain with a number of stakeholders, all the implications, one of the most important stakeholder groups being our own employees, the works councils, all the implication for them. And then we will, and also a number of other stakeholders, and then we will conclude the review before the Capital Markets Day, and then share the results of that review with you.

Farooq Hanif
Farooq Hanif
Head of European Insurance Equity Research at JP Morgan

So just, I'm really sorry to jump in on taking time, but has there been any regulatory pressure to do this?

Lard Friese
Lard Friese
CEO & Chairman at Aegon

No. Okay. Thank you.

Operator

Thank you. Your next question comes from the line of Ian Pearce from Exane BNP Paribas. Please go ahead.

Iain Pearce
Executive Director - Insurance Equity Research at Exane BNP Paribas

Hi, good morning everyone. Thanks for taking my questions. They're all around the re domiciliation. First, if you could just touch on what you think the main challenges will be of potentially redomiciling. Obviously, you flagged U.

Iain Pearce
Executive Director - Insurance Equity Research at Exane BNP Paribas

S. GAAP, but just sort of what you think the main challenges of the move would be? And have you had any conversations with your main shareholder about this move? I mean, clearly, their article dissociation might cause some problems for them with the re domiciliation potentially. And then the second one is just around the asset allocation opportunities of re domiciling and moving to a U.

Iain Pearce
Executive Director - Insurance Equity Research at Exane BNP Paribas

S.-regulated entity. Do you see that one of the main benefits of and is the plan to really re risk the asset portfolio in The U. S. And increase private asset allocations as part of this redomiciliation? Thank you.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

Thank you very much, Ian. I'll take the first couple of questions. And on your last question, I'll hand it over to Duncan. So if you look at the key challenges, so first of all, let's clear the Verenheng AFON, so the association Aegon, We cannot speak for them, obviously. They are informed, and we cannot speak for them.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

But they are informed that we will continue to engage with them, obviously, in the coming period. When it comes to the main challenges, while we expect this move head office processes in The US, we need to build down head office processes here. And we need to make sure that we do that well. US GAAP is a key gating item. We started with it, the project has started, but it's implementing a new accounting standard is going to take some time.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

And that is a key thing to make sure we do right. And of course, in the meantime, we need to make sure that this transition process is appropriately change managed. Those I would say are the key things to mention here. When it comes to the asset allocation opportunity potential of these, I

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

see no impact on the redolonization on our asset allocation choices or opportunity. We manage our entities on a local capital basis. So we're already operating under The US statutory regime for Transamerica and we have asset allocation appropriate to our liabilities in that market and I see no impact from that from a re domination.

Iain Pearce
Executive Director - Insurance Equity Research at Exane BNP Paribas

Thank you.

Operator

Thank you. We will now go to the next question. And the next question comes from the line of Nazzib Ahmed, UBS. Please go ahead.

Nasib Ahmed
Nasib Ahmed
European Insurance Equity Research Analyst at UBS Group

Morning. Thanks for taking my questions. So first one on just M and A. You've still got the financial assets. There's been a big variable annuity deal where I think the counterparty managed to get over the line on the counterparty risk, and that was one of the one of the blockers for you guys, I think.

Nasib Ahmed
Nasib Ahmed
European Insurance Equity Research Analyst at UBS Group

So any thoughts on kind of third party actions on on the 3,300,000,000 locked in? And then on the on the flip side, anything that you would potentially buy, and how does the US redomiciliation help with m and a on the acquisition side? Second one is on OCG versus IFRS in The US. So Duncan, you you raised the guide on the IFRS by 50,000,000, but I think the OCG guide stays the same. What's the what's the difference?

Nasib Ahmed
Nasib Ahmed
European Insurance Equity Research Analyst at UBS Group

Why haven't you raised the OCG guide in The US? Thank you.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

Yeah, so I'll take the M and A side, and then you can do financial assets, Duncan, on the piece about the OCG. So on acquisitions, same as we mentioned before, it's very much linked to our strategy. We want to grow like anybody, but any company wants to grow. So if we see an opportunity that makes sense, and it strengthens our business, and it makes sense both for financial criteria and non financial criteria, then we will certainly look at it. We will be disciplined.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

We're not going to do any M and A unless we believe that we can integrate it, and that we will create value for our stockholders. Now, The US is a large market, is our largest market. So being there physically with your head office, of course, and being closer to that market on a daily basis, obviously would be positioning yourself more beneficial for that. But our M and A approach has not changed what we mentioned before. Duncan?

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

Two separate questions. On the financial assets, we continue to look at our unilateral, bilateral and third party options on those sorts of businesses. We've been doing that for years and should the transaction present itself, which we find attractive for our shareholders, If it makes sense, we'll do it. If not, we won't and we'll focus on them, you know, lateral and bilateral. So no real change there.

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

We just continue to look at all our options as we have been doing for the last couple of years. On the guidance, well, two things, partly the guidance reflects what we actually see in our actuals on a clean basis in the half year. So we've seen that The US operating profit performed well in the first half under IFRS and that reflects therefore in the raised guidance, which means we expect that run rate to continue. And on OTG, performed more in line with our previous guidance and hence that's driven the unchanged outlook there. Bear in mind, are quite material differences in the way, for example, growth is treated under two regimes.

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

So under The US regulatory regime, as you grow, you enter a new business strain, which is depressing in the near term. Under IFRS and you create a CSM, which come through relatively quickly. So that is also an experiment, just a different thing.

Nasib Ahmed
Nasib Ahmed
European Insurance Equity Research Analyst at UBS Group

Okay, thank you.

Operator

Thank you. Your next question comes from the line of Farquhar Murray from Autonomous. Please go ahead.

Farquhar Murray
Senior Analyst - Insurance & Banks at Autonomous Research

Good morning, all. A couple of questions from my side, just mainly on the domiciling discussion. Obviously, it's been debated for years and does now seem a bit of a foregone conclusion. But I just wondered if you have a sense therefore on the actual like project costs of The U. S.

Farquhar Murray
Senior Analyst - Insurance & Banks at Autonomous Research

GAAP implementation? And then obviously getting close to The U. S. Business makes a lot of sense, but I just wonder where that leaves your approach on the rest of the global footprint. Thanks.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

So, first of all, the costs are going to be part of the review And we'll update you on the, let's say, the outcome of the review of the Capital Markets Day. When it comes to the total footprint, well, you know, we've set ourselves a perimeter in 2020 when I joined the company. We're now in that perimeter, and we have a strategy to improve and to create advantage businesses in that perimeter, and that is unchanged.

Operator

Thank you. Your next question comes from the line of Benoit Petrarque from Kepler Cheuvreux. Please go ahead.

Benoît Pétrarque
Head of Thematic Banking Research & Benelux Financials at Kepler Cheuvreux

Yes, good morning. So, the first one is actually on your ISR stake. What is your initial thoughts around your stake also going forward looking at the post potential relocation in The U. S? It sounds like it becomes less core than before.

Benoît Pétrarque
Head of Thematic Banking Research & Benelux Financials at Kepler Cheuvreux

And then maybe on ahead of the potential relocation, do you plan to initiate deleveraging actions at holding levels? So any plans to maybe refocus more on deleveraging next year? Thank you.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

Duncan, can you take both of questions?

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

Yes, nothing changes on either of those fronts. So again, today we announced a review. We'll conclude on that review with the Capital Markets Day. And if we decide to proceed, it'll take two to three years. The leverage, no need to change our leverage given our footprint is what it is today.

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

And on ASR, we've been consistent that we're a long term patient holder. And there are two potential reasons we were disposed of that either we have an alternative use for that or we feel that the price is reflecting intrinsic value. No change on either based on the announcement today.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

Thank you.

Operator

Thank you. Your next question comes from the line of Jason Kalambazis from ING. Please go ahead.

Jason Kalamboussis
Executive Director at ING

Yes. Hi. Good morning.

Operator

Jason, it looks like we've lost your connection. Can you hear us?

Lard Friese
Lard Friese
CEO & Chairman at Aegon

My suggestion operator is you move to the next question and then if Jason comes back we'll take his question obviously.

Operator

Thank you sir. I will now go to the next question. And your next question is a follow-up from Michael Huttner from Berenberg. Please go ahead.

Michael Huttner
Insurance Analyst at Berenberg

Hi there. On U. S. Mortality slide 17, can you talk a little bit about the unfavorable claims experience? I remember a figure, think, EUR 66,000,000 in Q1.

Michael Huttner
Insurance Analyst at Berenberg

So normally, you would have EUR 33,000,000 because of normal seasonality and there was EUR 33,000,000 on top. I just want to get a feel it's for which way it's going versus your assumptions? And the second question is, I'm really sorry, Lars, I didn't hear the answer on tools. I did the numbers. So on the savings and investment Q2 twenty twenty five, you had a 2,000,000,000 net inflow.

Michael Huttner
Insurance Analyst at Berenberg

It was zero in Q2 twenty twenty four. And you mentioned pool plan, I'm really sorry I didn't hear the number on that. Thank you.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

1,900,000,000.0.

Michael Huttner
Insurance Analyst at Berenberg

Thank you.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

So the pool plan, guessed it was 2,000,000,000. You're pretty It was 1.9.

Michael Huttner
Insurance Analyst at Berenberg

Thank you.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

For your other questions, I'll let you talk.

Duncan Russell
Duncan Russell
CFO & Member of Executive Committee at Aegon

Hey, Michael. We had a the overall mortality in The US in the second quarter was slightly positive. I would say more or less in line with our best estimate expectation slightly positive. So since the mortality update we did last year, we had positive 3Q, 4Q, negative 1Q, positive QQ this year. And we remain comfortable with our approval on that C substance.

Michael Huttner
Insurance Analyst at Berenberg

Brilliant. That's very helpful. Thank you.

Operator

Thank you. We have no further questions at this time. I would now like to hand the call back over to Yves Cormier for closing remarks.

Lard Friese
Lard Friese
CEO & Chairman at Aegon

Thank you very much, Sharon. Before I hand over to Yves, we will make sure we reach out to Jason Pamela Bruce's first question.

Yves Cormier
Yves Cormier
Global Head - IR at Aegon

All right. Well, thank you, operator. So this concludes today's Q and A session. Should you have any remaining questions, please get in touch with us at the Investor Relations team. And on behalf of Lard and Duncan, I would like to thank you for your attention. Thanks again and have a good day.

Operator

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

Executives
    • Yves Cormier
      Yves Cormier
      Global Head - IR
    • Lard Friese
      Lard Friese
      CEO & Chairman
    • Duncan Russell
      Duncan Russell
      CFO & Member of Executive Committee
Analysts
    • David Barma
      VP - Equity Research at Bank of America
    • Michael Huttner
      Insurance Analyst at Berenberg
    • Farooq Hanif
      Head of European Insurance Equity Research at JP Morgan
    • Iain Pearce
      Executive Director - Insurance Equity Research at Exane BNP Paribas
    • Nasib Ahmed
      European Insurance Equity Research Analyst at UBS Group
    • Farquhar Murray
      Senior Analyst - Insurance & Banks at Autonomous Research
    • Benoît Pétrarque
      Head of Thematic Banking Research & Benelux Financials at Kepler Cheuvreux
    • Jason Kalamboussis
      Executive Director at ING
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