Aegon Ltd. (AGN) Earnings Call Transcript

Ladies and gentlemen, my name is David Herzog, and I am Chair of the Board of Directors of Aegon Limited. On behalf of Aegon, I welcome you to Aegon's Extraordinary General Meeting of Shareholders. I hereby open the meeting. I'm pleased to welcome our shareholders participating in this meeting today. Let me introduce the people present with me here at the table. Lard Friese, Executive Director and our Chief Executive Officer; Albert Benchimol, Chair of the Nomination and Governance Committee; Mark Ellman, Chair of the Compensation and Human Resources Committee and Bieke Debruyne, Company Secretary. Also present here today are Onno van Klinken, our General Counsel; and Yves Cormier, our Head of Investor Relations. The other members of the Board of Directors as well as the principal representative of the company, Ms. Sonia Nauta are following the EGM in a virtual manner. I hereby appoint Bieke as Secretary of this EGM. She will keep the minutes to today's meeting. Before we continue, I would like to make a few remarks. First, in terms of procedure and given that the adoption of agenda item 2, is conditional upon the approval of agenda item 1. We will vote per agenda item and show the voting results per agenda item, respectively, after the voting for that item has closed. Second, Shareholders who have been registered through the e-voting portal prior to the start of the meeting and who are participating in a virtual manner have been directed automatically to the Lumi environment, in which they can vote and ask questions. To ensure a constructive dialogue with all our shareholders we have enabled, in the Lumi environment, a chat function as well as the possibility to ask questions live through a video connection. Shareholders who wish to ask their questions through a video connection during the meeting will be directed to the meeting by an operator. Please note that this may take a few moments. I have appointed Head of Investor Relations, Yves, to moderate all questions submitted, both through the Lumi environment and through the video connection. As a final remark, I hereby establish the following: This meeting was convened in accordance with Aegon's bylaws and the Company's Act of Bermuda as well as the legislation that is applicable in connection with Aegon's Dutch and U.S. listings. The attendance list for this meeting is currently being drawn up, and we will come back to that in a few moments. I wish you all a good and interesting meeting. Before we move to agenda item 1, the re-domiciliation proposal, Lard will give an overview of the journey that has led to today's meeting.

Thank you, David, and good day, everyone. Welcome. Today, I will briefly explain why the proposed move to the United States is the logical step for Aegon and cover the progress we have made and share why we are so confident about the opportunity ahead. Over the past several years, we have fundamentally reshaped Aegon. We have executed our strategy and delivered on our commitments. We have strengthened our businesses, managed capital with discipline and allocated more of that capital to the strategic assets that matter the most for our future. We also strengthened our balance sheet. As a result, Aegon today is a stronger more focused company with the United States at the heart of our business. We are ready for the next chapter and ready to become a leading force in the U.S. life insurance and retirement industry. The United States offer a compelling opportunity. It is the world's largest and most dynamic insurance market. Americans are living longer. The need to prepare for retirement continues to grow and there is a substantial insurance protection gap. Transamerica is well positioned to help address these needs. We have a strong heritage and an iconic brand, established and growing protection and retirement franchises with compelling propositions and an expanding distribution network with unique access to reach Main Street America. Moreover, Transamerica's businesses reinforce each other. As distribution grows, it feeds into Transamerica's life and annuity businesses. And as retirement recordkeeping grows, it feeds ancillary revenues. That gives us a strong platform from which to grow and help more people protect their families and prepare for retirement. Transamerica's first half 2026 results reinforce our confidence in Transamerica's growth potential. Transamerica delivered strong execution across the business. World Financial Group surpassed 100,000 licensed agents and agent productivity and premiums per policy increased. In savings and investments, we maintained momentum supported by strong written sales and asset growth. And in Protection Solutions, Individual Life sales increased by 54% and outperforming industry growth and supported by the successful entrants in the instant decision market. Taken together, this means that we are reaching more customers, strengthening our market position and building a broader platform for profitable growth. And this commercial performance is also showing up clearly in the financials. In the first half of 2026, Transamerica's operating results grew by 10% year-on-year. Operating capital generation increased by 35% and gross remittances were up 18% in I would also like to note that our global asset manager and our international businesses are doing well. These results confirm that Transamerica is not only well positioned but already making progress in capturing the opportunity we see in the U.S. market. The logic behind the proposed move is therefore straightforward. Aegon has changed. The U.S. is now the center of our business, our strategy and our future growth. Following completion of the announced sale of Aegon U.K. Approximately 80% of our business will be in the U.S. Yet our head offices in the Netherlands, are legal domicile is in Bermuda, and we report under IFRS standards. The proposed re-domiciliation is about aligning with the reality of our business. This means moving our head office to New York City and becoming a U.S. tax resident. Moving our legal sea to Delaware and aligning Aegon's governance with U.S. market standards. We aim to report under U.S. GAAP as of full year 2027, aligning our disclosures with the U.S. market participants and making our performance easier to compare. We intend to adopt the Transamerica name at group level becoming Transamerica, Inc. Finally, our common shares will trade on both the New York Stock Exchange and Euronext with the New York Stock Exchange becoming our primary listing and supporting our aim of inclusion in U.S.-focused indices. Taken together, the proposed move aligns our regulatory framework and supervision accounting standard, listing and name with where we conduct most of our business and where we see the greatest opportunity ahead. The work to prepare for the proposed move is already well underway. In recent months, we have made strong progress across several important milestones. We announced the sale of Aegon U.K. sharpening our focus on the U.S. market. We reached an agreement with our largest shareholder, deferring on our future relationship and presented a proposed U.S. aligned governance framework. And this was the basis for a meaningful engagement meetings with investors in the past months. We implemented the necessary leadership and organizational changes to support the future group structure, appointing Will Fuller as President and Chief Operating Officer of Aegon as of January 1, 2027. We selected New York City as the future location of our head office. And I will be moving there early 2027 to lead the transition of our company from its new center. I'm excited that my mandate has been extended through 2030 to ensure continuity of management in this major transformation of the company. We issued a USD 500 million denominated bond establishing a U.S. yield curve. In parallel, we are advancing the implementation of U.S. GAAP and continuing the operational and regulatory preparations required for the transition. And finally, we intend to provide U.S. GAAP KPIs at our Capital Markets Day in December 2027 and giving investors visibility before we transition to U.S. GAAP reporting. There is still important work ahead, but we have a clear way forward, strong momentum and a disciplined path to get there. And all of this supports a clear ambition to become a leading U.S. life insurance and retirement company with a global asset manager and well-positioned international subsidiaries. We want to serve more customers, further strengthen our market position and build a bigger, better and more profitable life insurance and retirement company, a leader in the U.S. market. And we have the foundations to do that, an iconic brand, strong businesses and growing commercial momentum in a market with clear long-term demand for protection and retirement solutions. I'm excited about the opportunity ahead and confident in our ability to build a stronger future as Transamerica. I want to express my sincere gratitude to all my colleagues across the company. It is because of their incredible hard work and continued dedication to our customers that we can look forward to an exciting future. Thank you. David, back to you.

Thank you, Lard. Before we move to agenda item 1, I would like to inform you that the attendance list of today's meeting is ready. Our first order of business is to determine whether the common shares of the company represented at this meeting, either in person or by proxy, are sufficient to constitute a quorum for purposes of this EGM. The quorum for a general meeting is set when 1/3 of the shares entitled to vote is present or represented. Based on the attendance list, I hereby establish that 64% of the issued and outstanding capital is present or represented at the meeting. Therefore, the quorum requirements have been fulfilled and we can proceed with the meeting. Before we move to the first voting item, let me briefly explain how you can vote via the Lumi application. The voting app displays the following options: For, against, withheld. After you have voted, the display will show your vote. If you want to change your vote, you can do so until the voting on the agenda item has closed. We will now move to agenda item 1, the re-domiciliation proposal. This is a voting item. The live voting for agenda item 1 is now open and will remain open until we have addressed your questions regarding agenda item 1. This proposal, if approved, allows us to complete the move we announced at our Capital Markets Day in December of 2025, re-domiciling Aegon to the U.S., renaming to Transamerica Inc. and putting in place a governance and capital structure aligned with the U.S. marketplace. The re-domiciliation proposal incorporates 5 items. First, a continuation into Delaware. Second, interim bylaws that provide for certain changes to take effect from and subject to the completion of the Vereniging Aegon split, including the reduction of the authorized share capital from EUR 720 million to EUR 504 million. From this point forward, I will refer to Vereniging as the Association. Third, the mechanics of exchanging the common shares B into a single class of common stock. Fourth, termination of the voting rights agreement with the association. And fifth, adoption of the Transamerica Inc. Charter and bylaws that will be effective with the re-domiciliation. As already mentioned by Lard, re-domiciling to the U.S. supports our ambition of becoming a leading U.S. life insurance and retirement group. It will simplify our corporate structure by aligning legal, tax, accounting and regulatory framework with the geography where we conduct the majority of our business. Upon effectiveness of the re-domiciliation, which is expected to occur on or about the first of January of 2028, our business, operations, assets and liabilities will be the same as they are immediately prior to the re-domiciliation. We will continue as the same legal entity without interruption and will continue to exist after the re-domiciliation as Transamerica Inc. Our common share will remain issued and outstanding and will become shares of Transamerica Inc. The governance framework in connection with the re-domiciliation was developed in agreement with the association and was informed by multiple engagements with various stakeholders over the past several months. The framework holistically aligns our practices with U.S. standards, including a phased implementation of annual director elections, a single class of common stock with equal voting rights, authorization of preferred stock as is customary for U.S.-listed companies, majority voting in uncontested elections with a resignation policy with respect to contested elections plurality voting and the elimination of the current 2/3 voting requirement. We are not asking shareholders to wait until 2028 for these governance changes to take effect. Bermuda law allows shareholder-approved governance changes to take effect during the interim period. Therefore, if the re-domiciliation proposal is approved, we will proceed on October 15, 2026, and effectuate the exchange of all outstanding common shares B held by the association against issuance of common shares on a 40:1 basis at which point our interim bylaws will become effective. We will now address your questions regarding item 1. May I invite shareholders participating virtually to ask their questions. You can either enter your questions in the chat function or you can choose to ask your questions live through the video connection. The operator will be available to assist you. Again, please note that connecting through the video connection may take a few seconds. Now we will address your questions. Moderator, are there any questions from shareholders via the chat or the video connection. Yes. So very good. So the first question from [ Yumanian. ] Does the Board intend to engage with shareholders before adopting any future material board-initiated bylaw amendments that could affect shareholder rights? First of all, thank you very much for that question. I will turn it to Albert here momentarily, but I want to convey that the Board and management have had a very robust engagement with shareholders over the course of the last many months. In fact, we have met with holders of shares of roughly 50% of our outstanding stock. And we value that interaction. It's very helpful to us because at the end of the day, we work for the shareholders. So Albert, over to you, please.

Thank you very much, and thank you for the question. So as we discussed during our engagement processes, we've tried very much as a design principle to align our governance to be aligned to best practices in the United States, the as well as the participants in the insurance and retirement industry. We feel that is the best way to position our company as a transparent and trusted organization. And so with that principle in mind, we found that over 95% of S&P 500 companies provide the Board the right to unilaterally change the bylaws. And so we think it does make sense for the Board of our company to have that right to make the unilateral change. We think that increases flexibility to respond to the various items that may come up in the future. without having to wait for any future vote. That said, this is not an exclusive right. Shareholders also have the right to amend the bylaws through the various proposals and voting processes. And of course, in addition to that, many of our core governance principles are actually embedded in our charter, which cannot be changed without shareholder proposal. So we believe that all of these structures together provide for a well-balanced governance. David?

Thank you, Albert. Next question, please. Second question from [indiscernible]. If SEC Rule 14a-8 is materially weakened or rescinded with shareholders who validly submit business under the bylaws, still have access to including such business in the company's proxy statement or proxy card. Albert?

Thank you for the question. And this is definitely something that came up during our conversations with shareholders prior to this meeting, and we've been following that process. Just a little bit of context. This is a proposal that's come through with the SEC. It still has not been approved. We have no idea what will end up. So I think at this point in time, we have to recognize that it's still too early with too many unknowns to take a strong position going forward. Among the questions that we have, number one, will this pass? Secondly, one of the rationales for the SEC to propose this is to allow states to propose their own governance rules and guidelines, and we have no idea what Delaware will do at this point in time. So we need to see what the Delaware rules are. And finally, with regards to our design principles of aligning ourselves with best practices, I think it's important for us to take a look at what other companies do, especially members of our industry. So this is something that is obviously quite important, something that we will spend a lot of attention to, but we believe that at this point in time, it's a little premature to take any strong positions going forward. David?

Thank you, Albert. The next question, please. So we have a question from the [ VEB, David Tomic. ] Hello, David?

The re-domiciliation clearly marks a new chapter in Aegon's transformation. It's fair to say that the company has undergone a significant de-risking and restructuring under the current management team. through the combination of its Dutch activities with ASR, for example, as well as the announced sale of Aegon U.K. After a prolonged period of challenges and so our performance the past few years have shown a gradual improvement in performance. And VEB appreciates the strategic direction and the improvements in commercial and financial performance under the leadership of Mr. Friese. Now the strategic choice to re-domicile to the U.S. seems rational. Having said that, and as Aegon rightfully mentioned as well. The U.S. insurance sector is characterized by intense competition for many insurers. And in this competitive landscape, Aegon may still be considered a relatively small player. And now I come to -- in this round to a couple of questions if you allow me. Now it is clear, as I mentioned that Aegon increasingly looks American with Transamerica representing around 80% of its operations. Aegon, in the shareholder circular states that the relocation could improve access to U.S. investors and indices and could also make its shares more attractive as acquisition currency and U.S. transactions. In this context, and that's the first question. What aspects of Aegon's business within its own control in your view, are both necessary and achievable to instill even more confidence among investors and improve Aegon's visibility and access to U.S. investors. That will be my first question. And the second question is what conditions in your view, must be met before Aegon undertakes M&A activity during the relocation, the U.S. GAAP implementation as well as CFO transition. And how will the Board establish that management has sufficient integration capacity without putting the existing business or reporting quality at risk.

Thank you. Thank you very much for those two questions. Lard, I'm going to ask you to address question 1 first, and then we'll address the second question after you're done. Thank you.

Thank you very much, Mr. [ Tomic. ] The -- if you look at the rationale, I think I've explained that in my opening statement of why we believe it's is the right step for us to take and the logical step for us to take. Our company in the U.S. had -- and the management team in the U.S. has over the last years demonstrated. To execute successfully on a plan to make the company grow and to make it stronger in importance. We are one of the fastest-growing life insurance companies in the U.S., top 5 in sales right now and growing faster than the market. We operate the largest our second largest distribution platform in the United States, which gives us unique access to mainstream American families. We operate a successful well-positioned retirement business with small- and medium-sized companies as the main focus where we are consistently growing. And in fact, the written sales that we had at the half year has been at the highest level since the last number of years. So our company in the U.S. is, we believe, ready for this new phase and ready to look at a successful future. Now we also believe that if we if we move to the U.S. and present our company basically relaunch our company in the U.S. capital markets, which the U.S. Capital Markets Day that we plan to host at the end of next year. We will then disclose our plans for the future, but it will likely be more of the same because -- what we have done is improve all these businesses that I just mentioned, which are all focused on one thing, which is serving an underserved market segment in the and large market segment in the U.S. marketplace, where we are demonstrating success. We are on the curve of good growth and profitable growth, and we will certainly continue to do so. So we believe that we're ready, and that's why we are proposing to relocate and asking for your vote on this today.

Thank you, Lard. As for your second question about conditions to M&A as opposed to maybe conditions, I would offer to think about it in terms of dimensions to how we would think -- as a Board, how we would think about M&A and overseeing management in that activity, but it -- to me, it first starts with us. It first starts with the commercial logic of a proposed transaction so that it would be seen as being sound and logical. I think you can take some lessons from the current activity that we're under doing now. If you look at the relocation and the re-domiciliation, there is a tremendous amount of commercial logic that aligns the business and the oversight. So it's -- there's a commercial logic to it. The next would be thinking about it in terms of returns, while I'm not going to give any forecast or targets or thresholds, but it would be in terms of relative returns, putting money to work in one activity versus another, and to understand management's rationale. And maybe finally, understanding the risks, and there are lots of risk with M&A types of transactions. There's execution risk, there's transition risk. There's a -- there are many elements of that. And we would have in place or we do have in place a very robust and capable risk committee of the Board, but we would, as a Board, undertake oversight of that as a board. So again, no specific precondition but think about it in terms of the dimensions that would be involved. I hope that's helpful.

Thank you for your reaction. If I may ask one follow-up perhaps right now. It's about the greater attractiveness of your shares that you mentioned as an acquisition currency, which is also a beneficial effect of the re-domiciliation. Now let me put it this way, if Aegon succeeds in its journey and shares re-rate after the re-domiciliation in due course. Is the company then willing to commit to assessing possible share funded acquisitions against the intrinsic value of the shares rather than the prevailing market price and to maintain the same economic return requirements?

Lard?

I think it's really -- thank you for your question, but I really think this is too early. Every acquisition will be judged at its own merits at that particular point in time. And so we are focused on our organic strategy, obviously. And if there is an M&A opportunity, we will evaluate this along the lines that David just mentioned, be very disciplined in it, and we cannot speculate at this point in time on any potential funding of that, and how the deal structure would work. And this is a way to -- I think this is too premature to do that.

So the focus is absolutely on doing more of the same, as you mentioned, and getting ahead on your path of organic growth?

Yes. So we operate the company out of the conviction that our business is well positioned in the United States. We are focused on serving an underserved, very large underserved part of the U.S. industry of the U.S. market, which are mainstream American families and companies, medium- and smaller-sized companies with employees for whom we offer pension arrangements and additional products. Our organic growth plan is clearly working as demonstrated by our numbers over multiple reporting periods. And that is always the focus on building our organic path and continuing to make progress with that. Now should we be confronted with an opportunity to accelerate that path through M&A activity. We will judge it at its own merits when it makes sense, we act. If it does not make sense, we will not. And that's the way we think about this.

Thank you very much. Are there additional questions? Okay. If there are no further shareholders wishing to speak, we will proceed with the voting on agenda item 1. Please submit your vote now if you have not already done so. We will pause to allow all the votes to be submitted as within a few moments, we will close the live boating for agenda item 1. [Voting]

The voting is now closed. We will take a moment to count the votes for agenda item 1 and present the outcome to you. Thank you for your patience. On your screen, you now see the voting results for agenda item 1. I hereby establish that the meeting has approved the re-domiciliation proposal, which includes: a, the re-domiciliation of Aegon by way of continuation into Delaware as a public company under the name Transamerica Inc., a Delaware corporation. B, the adoption of the interim bylaws with effect from and subject to completion of the association split, including the reduction of the company's authorized share capital from EUR 720 million to EUR 504 million as a result of removing the common shares B from our authorized capital. C, the authorization of the Board of Directors to acquire all of the issued and outstanding common shares B and Aegon's capital structure against the issuance of common shares on a 40:1 basis to give effect to the exchange of all common shares B for common shares, subject to and upon the completion of the association split. D, the termination of the voting rights agreement between the company and the association. And E, the adoption of the certificate of incorporation and bylaws of Transamerica Inc. Approval of the re-domiciliation proposal also means that we can continue and effectuate the exchange of all outstanding common shares be held by the association against the issuance of common shares on a 40:1 basis on October 15, 2026, at which point our interim bylaws will become effective. We will now move to agenda item 2, the Omnibus Incentive proposal. This is a voting item. And the adoption is conditional upon the approval of the re-domiciliation of proposal under agenda item 1. The live voting for agenda item 2 is now open and will remain open until we have addressed your questions regarding agenda item 2. Mark Ellman, the Chair of the Compensation and Human Resource Committee will present the Omnibus plan. Mark, over to you.

Thank you, David. Ladies and gentlemen, before we ask you to cast your vote, I would like to share why we are bringing this proposal forward now, and how the plan has been designed. The proposed Omnibus incentive plan transitions us to a single U.S. style equity compensation framework as of January 1, 2027. This plan replaces our existing equity and executive long-term incentive programs, any awards previously granted under the existing plans will remain subject to the terms of those applicable existing plans. We are asking for approval now rather than waiting for the formal legal re-domiciliation to be completed because following approval, the company will begin operating in line with U.S. governance and market practice. Our ability to recruit and retain experienced senior leaders in the U.S. is a critical success factor for the transition and for building out our New York headquarters. Having the right equity compensation framework in place is central to that. On the size of the request, we are asking for 50 million shares, which represents 2.8% of all shares outstanding. We anticipate that pool to approximately cover at least 3 years of grants across a full range of award types. In addition, we expect our annual burn rate, and that's the percentage of shares that we annually use for compensation compared to the total number of shares outstanding will stay below 1%, which compares favorably to potential U.S. insurance competitors. The plan reflects investor expectations, and you'll see the specifics on the slide. Key protections include double trigger change in control vesting, no liberal share recycling and no repricing without shareholder approval of options. The design reinforces long-term alignment through minimum vesting and no dividends or dividend equivalents are paid on vested equity. Other features include a fixed share reserve with no evergreen provision and application of our clawback policy across all of our award types. I want to emphasize, our compensation philosophy is not changing. It remains firmly anchored in pay for performance and performance share units with a 3-year performance period will continue to be the main long-term equity incentive vehicles for our executives. Back to you, David.

Thank you, Mark. We will now address the questions regarding agenda item 2. Moderator, are there any questions from shareholders via the chat or video connection. We have a question from [ VEB, Mr. Tomic. ]