Stephen Hayward's questions to Aegon Ltd (AEG) leadership • H2 2024
Question
Stephen Hayward asked about the conservatism of the Expected Credit Loss (ECL) impairments and the likelihood of them materializing. He also sought a better economic explanation for the RBC ratio's negative sensitivity to both rising and falling markets.
Answer
CFO Duncan Russell explained the ECL charge was driven by more prudent forward-looking assumptions, particularly on US unemployment, rather than current defaults. On RBC sensitivity, he clarified the counterintuitive result stems from the flooring of VA reserves under US statutory rules, which creates a prudence buffer in up-markets that then mitigates the impact of down-markets. He suggested IFRS sensitivities are a better guide to economic exposure.