What Is Going On With AEGON N.V. (ADR)(NYSE:AEG)?


In an attempt to balance the dilutive impact of the dividend payouts of 2016 and this year, AEGON N.V. (ADR)(NYSE:AEG) has decided to repurchase nearly 51.864 million shares of company’s common stock. These equities will be kept as treasury stock, which in future can be used for stock payouts.

The highlights

Earlier Alex Wynaendts, the CEO of Aegon, expressed that the company’s second quarter results are impressive and reflect the strong positive momentum in their financial and businesses markets, as well the advantage from expense savings. He is delighted that management actions are bringing the desired outcome, especially the marked improvement in the profitability of their U.S. business. This improvement, coupled with the book gain linked to the divestment of the majority of company’s U.S. run-off business and associated derivative positions, ropes net income of 529 million euro for the respective quarter.

Wynaendts reported that they are also announcing a range of plans that significantly increase their solvency ratio, counting a capital injection of 1 billion euro in company the Netherlands and deal with their regulator on several outstanding solvency-related topics. These plans, coupled with the recently reported strategic divestments, strengthen their capital position, increase their financial flexibility and enhance the outlook for capital generation, all of which provide the management confidence in their ability to recompense 2.1 billion euro to stockholders over the period of 2016 to 2018.

Aegon has also acquired approval from DNB to amend the conversion process for its U.S. business under Solvency II. This process is consistent with EIOPA’s projection on how to compute group solvency in the matter of equivalence. It comprises lowering of the conversion factor to 150% RBC from 250% and lowering own funds by 100% RBC obligation to reflect transferability limits. The process is subject to yearly review. This change in process leads to a jump in AEGON’s group solvency ratio by 15% points, enhances the quality of capital and improves comparability with European peers.