Aegon Ltd

For the first half of 2026, Aegon has reported what we believe are slightly weak operating results, excluding the comparable prior results for the United Kingdom. The 169% solvency is also a concern. That's the lowest it's been since the disastrous days of Aegon's Solvency II implementation.

Why it matters: For the first half of 2026, Aegon has delivered an operating result of EUR 804 million. That does stack up well against the EUR 741 million, excluding the UK, delivered in the first half of the prior year. It also stacks up well against the business' broad 5% per-year operating profit growth ambition. However, protection remains Aegon's most important business. For the first half, the business has delivered $424 million in individual protection sales, placing it exceptionally well against a $720 million target for 2027. However, operating profit growth is well below the 10% ambition. There is barely any movement in the top line of World Financial Group distribution. Yet here the business is tracking well against its target of 110,000 licensed agents for 2027. Very good expense control is resulting in it looking on track to achieve its 10% annual operating profit growth for 2027.

The bottom line: We maintain our EUR 8 per-share fair value estimate and no moat rating. Shares screen as fairly valued at the time of writing. Similar to protection, there is a lag in savings and investment. The retirement plan subsegment's gross deposits are down 7% half on half. Retirement plan's net deposits have moved from $2.1 billion to negative $5 billion over the same period. It is meeting only half of its operating profit growth ambition. With a EUR 0.21 interim dividend per share, the business is exceeding its 5% per-year growth ambition. However, with the weaker operating performance in its divisions, it is very hard to get away from the 169% solvency that brings back bad memories of balance-sheet weakness.

Our fair value estimate is $9.15 per share.

In 2020, Aegon announced the intention to release capital from business divisions it classifies as financial assets that at that time accounted for around 45% of the company’s earnings. This included the closing of the variable annuities business, where the products carry interest-rate-sensitive riders, as well as the fixed-annuity and long-term care books. Aegon has reduced the capital that it has invested in financial assets by $1.4 billion since 2022, placing the business well against a 2027 target of a reduction of $1.9 billion. However, while it initially looked to sell these blocks completely, Aegon subsequently decided ownership was best for shareholders in the medium term. As a result, Aegon expanded its dynamic hedge program to reduce the capital required for variable annuities. Subsequently, universal life and single premium group annuities products were added to financial assets to form a total $1.5 billion of 2020-23 capital release. Going forward, with further organic runoff of these products combined with more management actions over the next five years, Aegon anticipates an additional $1.8 billion to be released from financial assets. It intends to use this released capital to provide it with additional financial flexibility to run down these financial assets further release more capital. Aegon anticipates with the $1.8 billion of planned financial asset capital release to be achieved by end-2027, the amount of capital left invested in financial assets in the US should be equal $2.2 billion.

In the WFG business, Aegon generates a little under $1 billion in revenue with 96,000 agents, and that revenue is generated through the sale of third-party products. Revenue generated per agent is around $11,000, and WFG generates an operating margin on revenue of double digits. WFG has an ambitious target of improving operating profit via a 20% increase in the number of agents and agent productivity out to 2027.

Aegon’s Transamerica Life business uses WFG agents to sell Transamerica life insurance products across three main categories. Traditional term life is simply insuring the policyholder against death and provides the designated beneficiaries with a payment in the event of death occurring within the policy term. The Transamerica term life product is a more affordable product because it is simple and is therefore popular among young middle-market families and individuals early in their careers. Final expense insurance products ensure there is enough value in the policy to pay for end-of-life expenses when the policyholder passes. Indexed universal life is a popular savings product in the US used for the combination of protecting against loss of life and earnings and therefore protecting beneficiaries, while at the same time saving tax-efficiently for the long term. We use our forecasts for the number of WFG agents and an expense margin to forecast operating profit. Transamerica is looking to increase sales and productivity of IUL products and is not focusing on sales of traditional life and final expense.

Transamerica Workplace currently has around 3.5 million plan participants contributing a portion of their salary to long-term savings. These savings contributions drive Transamerica’s assets under administration along with market appreciation. Transamerica Workplace earns around 20 basis points on AUA for recordkeeping and around a further 20 basis points of AUA for stable value solutions, IRAs, and ancillary services and products.

We use an exchange rate of $1/EUR 0.8757 as of July 2026.

We do not award Aegon an economic moat.

Aegon is now composed of one mature market and one set of growth markets. Having divested its Eastern European operations to Vienna Insurance Group, Aegon’s the Netherlands, and Aegon, UK, its core markets are scaled down to the United States. Though Aegon still has indirect Dutch and UK exposure.

In December 2020, Aegon North America ultimately set out its stall to focus on three areas: World Financial Group, indexed universal life, and retirement savings.

In World Financial Group, a Transamerica-owned distribution network, agents focus on serving the middle market. WFG looks to differentiate itself by recruiting advisers from multicultural and diverse communities that lend toward an immigration background and that have historically been underserved. That is because advisory peers tend to focus on affluent and high-net-worth demographics that tend to be concentrated in large cities, whereas the middle market tends to be spread throughout North America. Across the WFG network, 75 languages are spoken, and 65% of the agents are non-white. WFG is not focusing on big-ticket sales but instead concentrates on the nearly 70 million US households with $50,000-$200,000 of annual income. Because these communities have historically been underserved, by recruiting from within communities, agents become trusted advisers more easily and have a smoother journey in selling long-term savings products to consumers who are less trusting because they have had less contact and opportunity to do so. This idea of serving the middle market goes back to the company’s roots, which were established over 100 years ago with the idea that financial security should be available to all and set up to serve underserved communities. Larger protection gaps tend to exist here, and products tend to be a lot simpler because of the customers' less sophisticated wealth demands.

WFG has around 96,000 agents spread across 7,000 offices throughout North America, serving 6 million customers. The distribution network primarily sells Transamerica products, around two-thirds, but agents are free to sell third-party provider products. These tend to be complex and better tailored to affluent customers. WFG is the third-largest agency force in the United States and one of the largest in Canada. We think this is one of the strongest businesses for Aegon and one that could, over time, represent a nice niche business. WFG sells 1 in 5 indexed universal life products across the United States and generates double-digit operating margins.

We think around 70% of the products WFG sells are indexed universal life; Transamerica ranks number five in the US in terms of IUL sales. This is a simple term life insurance product where premium contributions pay for the death benefit; in addition to these premiums, the policyholder contributes regular amounts into a savings portion. This investable part of the policy builds wealth over time as the sums contributed are invested in a variety of indexes with return caps and floors.

IULs are frequently used as a long-term savings product in North America because of the tax advantages and investment, while also providing protection against death for the family of the policyholder. At policy maturity, if the underlying policyholder hasn’t passed, the accumulated value can be cashed in and used for retirement. Individual retirement savings are important in the United States with Pillar 1 less well developed in North America. While most companies provide a workplace pension for employers, this is optional. WFG sells over 200,000 IUL policies annually with a 12% unleveraged internal rate of return. These returns are seemingly higher than the returns of IUL products in the broader market as a consequence of targeting the middle market. We think the business has around a 7.5% IUL market share and tends to sell policies with a face value below the market average. While the business has a long way to go before it can establish an intangible asset or cost advantage, Transamerica is working toward it, targeting double-digit indexed universal life sales growth.

In workplace savings, the Transamerica retirement business is centered on keeping retirement records. Transamerica is a top-five player in small and medium-size retirement plan recordkeeping, which essentially serves companies with up to 1,000 employees, and its salesforce tends to focus on businesses with assets of $5 million-$100 million. In Transamerica’s retirement platform, where it competes with the likes of Fidelity and Empower, the business administers and maintains retirement plans for individuals who have a plan with their employer. Transamerica’s business offers these individuals access to over 2,000 funds in which they can invest their assets. Of the close to $255 billion in assets under administration, around 10% is invested in Aegon Asset Management funds.

While Transamerica’s middle-market retirement plan business may not be the perfect feeder for Aegon Asset Management because of its fiduciary responsibility, this business demonstrates scalability and potential switching costs. For example, with 3.5 million plan participants across over 20,000 retirement plans, we think the retention rate is around 95%. The average annual income of these plan participants is $80,000, and these plan participants save around 7% of their salary on an annually. That is over $20 billion in annual contributions, and we forecast over the next few years assets under management should reach over $260 billion. This retirement business produces revenue at around 0.4% of deposits, split between record keeping and ancillary services and products. Our forecasts take this to close to a $1 billion revenue business by year-end 2027.

Aegon is cracking down on a turnaround and investing in stable earnings and low-capital requirement products.

The company has proved it is following this strategy with the divestment of its Eastern European operations and the recent divestment of its capital-intensive Netherlands division.

Investors are starting to see the shape management wants the business to take. Given the long history of a diversified company without strengths and key competencies, this is nice.

There is still some runway for releasing capital out of financial assets, and investors are unsure of how well it can be used internally versus distributing it to shareholders.

Even with the full release of capital from financial assets, stable value solutions and Indexed Universal Life will still be capital-consumptive products.

While leverage has been addressed, solvency still remains quite soft.