Aegon bets on Transamerica to boost cash flow and dividend in 2025

4:54 am Thursday, June 22nd, 2023

(Reuters) -Transamerica owner Aegon on Thursday forecast a higher free cash flow and dividend in 2025, flagging untapped potential in the U.S and stepping up its strategy to invest in higher-return assets.

The Dutch-listed insurer said it sees free cash flow of about 800 million euros ($878.96 million) in 2025, up from the 600 million it expects for 2023. It also projects a dividend per share of around 0.40 euros in 2025, from around 0.30 euros expected for 2023.

ING in a note to clients said the “targets allude to wider ambitions”, adding Aegon’s management has consistently beaten its own forecasts.

Aegon is refocusing its corporate structure and intends to raise investments in what it terms “strategic”, higher return assets. It also sees untapped potential in the insurance market in the U.S, where it is present through its subsidiary Transamerica.

In a media call, Aegon’s CEO Lard Friese told reporters: “There are 68 million households, which are called the so-called middle-market in the United States. This is a market segment that is relatively under-served by the financial services industry…”.

Transamerica, Aegon’s largest business, will further invest in its insurance distribution network World Financial Group (WFG), and will aim to increase earnings from its retirement business.

WFG has a network of around 70,000 insurance agents across the country, the company said, adding that Transamerica hopes to increase this to 110,000 agents by 2027.

Aegon’s 4.9 billion-euro deal with ASR, in which it is selling its Dutch operations in exchange for cash and shares, should be completed “in the coming weeks”, it said.

Analysts have said that the nearly 30% stake that Aegon will gain in its smaller rival ASR after the transaction should ensure it also benefits from Dutch pension reform.

The company, which is holding its Capital Markets Day on Thursday, added it would take “key talent management decisions,” and presented a new logo.

($1 = 0.9102 euros)

(Reporting by Olivier Sorgho; Editing by Clarence Fernandez and Sharon Singleton)