Iain Pearce

Iain Pearce sought more details on the impacts flagged from downgrades and defaults, asking what specific holdings or segments (e.g., private credit, U.S. related) were driving this and if there are concerns about further credit deterioration.

Answer

CFO Duncan Russell explained that the impacts relate to movements in the Expected Credit Loss (ECL) under IFRS, as detailed in the statistical supplement (page 15). He noted relatively small and benign transfers between ECL stages across a range of bond and ABS holdings, confirming the asset portfolio is generally performing very well.

Iain Pearce inquired about the specifics of impacts from downgrades and defaults flagged in Aegon's presentation, seeking details on what these relate to, concerns about further downgrades in investment credit, and any involvement of private credit holdings.

Answer

CFO Duncan Russell explained that under IFRS, movements in the Expected Credit Loss (ECL) were observed, with some transfers between stages (Stage 1 to 2, and 2 to 3) as detailed in the statistical supplement (page 15). He characterized these movements as relatively small and benign, occurring across a range of bond and ABS holdings, and affirmed that the overall asset portfolio is performing very well.

Iain Pearce of Exane BNP Paribas questioned the main challenges of the potential re-domiciliation, including the U.S. GAAP transition and any discussions with the main shareholder, Vereniging Aegon. He also asked if the move presented asset allocation opportunities, such as re-risking the U.S. portfolio.

Answer

CEO Lard Friese identified key challenges as building up head office processes in the U.S. while reducing them elsewhere, managing the complex U.S. GAAP implementation, and ensuring proper change management. He confirmed Vereniging Aegon has been informed. CFO Duncan Russell stated he sees no impact from the re-domiciliation on asset allocation choices, as the U.S. entity is already managed under the U.S. statutory regime with an appropriate asset allocation for its liabilities.

Ian Pearce from Exane BNP Paribas requested more detail on U.S. new business trends, specifically why WFG agents are selling fewer Transamerica products and what third-party products are in demand. He also asked for clarification on the term 'gradually' regarding the plan to reduce cash holdings to the €1 billion target by 2026.

Answer

CEO Lars Fraser explained that WFG agents followed market demand for annuity products, particularly fixed indexed annuities, which Transamerica does not manufacture. He emphasized that Aegon still benefits financially through distribution revenues from these third-party sales. CFO Duncan Russell reiterated that the cash reduction to €1 billion by 2026 will be achieved through strategic investments or shareholder returns, without providing a specific linear timeline.