Dutch insurer Aegon (AEGN.AS) has significantly raised its annual capital generation forecast following a strong third-quarter performance, primarily driven by its robust presence in the key U.S. market.
Aegon’s strategic efforts to streamline its corporate structure by divesting Central and Eastern European businesses and concentrating on its U.S. operations have yielded positive results.
For the current year, Aegon anticipates its operating capital generation to reach approximately 1.2 billion euros ($1.3 billion), surpassing its previous projection of achieving this milestone by 2025.
While the company has revised its near-term capital generation expectations upwards, it has maintained its long-term 2025 targets.
CEO Lard Friese indicated that there might be a slightly higher capital strain in the future.
This optimistic financial outlook has resonated well with investors, reflected in Aegon’s stock price surging by 3.7% to around 5 euros as of 0852 GMT. KBC analyst Thomas Couvreur highlighted the insurer’s continued solid sales momentum and robust underlying results in a note to investors.
Aegon’s performance in the third quarter was particularly impressive, with the company generating 310 million euros in operating capital.
This figure marked a 29% increase compared to the previous year and exceeded analyst expectations of 212 million euros.
Notably, Aegon’s Americas region, primarily comprising its U.S. business, contributed significantly, accounting for two-thirds of the operating capital generated during the quarter.
However, the picture was somewhat mixed in the United Kingdom, where the company generated around 15% of its group operating capital.
In this region, total net deposit outflows widened by 6% to 1.92 billion pounds ($2.38 billion) during the quarter.
CEO Lard Friese attributed this development to the loss of a major client in the pension business. Despite this setback, Friese emphasized that there was still robust underlying growth in the region.
In summary, Aegon’s revised annual capital generation forecast, driven by its strong performance in the U.S. market, has buoyed investor confidence.
While the near-term outlook appears promising, the company remains committed to achieving its long-term targets, even as it anticipates potential capital challenges in the future.