Aegon Slumps as Move to US Ushers in ‘Transition Period’
TL;DR
Dutch insurer Aegon is relocating its headquarters to the US and rebranding as Transamerica Inc., with the transition expected over two years and costs of €350 million. The move follows a strategic shift to focus on its US business, including a review of its UK operations and share buybacks.
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Aegon Ltd.’s shares dropped after it unveiled disappointing payouts, overshadowing a confirmation it will move its headquarters to the US.
The company will buy back €400 million ($466 million) of its own shares next year, it said in a statement on Wednesday. It also plans to grow the dividend by more than 5% annually during the transition phase, from around €0.4 per share for 2025.
The Dutch insurer, which will rename itself Transamerica Inc., intends to complete the move over the coming two years. It expects to incur about €350 million ($407 million) in associated costs through the first half of 2028.
The announcement kicks off “two years of transition that may disappoint those looking for higher distribution,” KBW analyst Michele Ballatore said in a note. The period will see “limited growth in earnings but with de-risking efforts which will leave the group in good shape for the future, almost exclusive, focus on the US business.”
Aegon’s shares dropped almost 10% after the open in Amsterdam on Wednesday and were trading down 7.8% at 9:54 a.m.
Moving to US
The insurer generates the majority of its profit from the US and a move to the country had been on the table for some time, with Aegon announcing in August that it was considering the shift. In 2022, the company agreed to combine its Dutch operations with ASR Nederland to create a leading player in its home market.
“We have a thriving franchise with Transamerica,” Chief Executive Officer Lard Friese said in an interview. “We will continue to to grow that into a market-leading business in life and retirement propositions for Main Street America in the coming years.”
In a further measure that could lower the company’s business presence in Europe, it’s initiating a strategic review of Aegon UK, saying it’s evaluating all options including a sale. Aegon is working with advisers and the review should be completed in the first half of next year, Friese said in an interview on Wednesday, confirming a previous Bloomberg News report.
Aegon’s international business also includes markets in Spain, Portugal, Brazil, China, and Transamerica Life Bermuda. Those businesses “are growing nicely, and therefore we’re happy with them, and we will continue to support their growth,” Friese said in the interview.
Read More: Aegon Said to Explore Divestments to Bolster Focus on US Market
The departure of Aegon from the Netherlands comes after wireless operator Veon Ltd. said last year it’s planning to move its headquarters from the country to Dubai. Several other Dutch companies at the time were expressing concerns about the souring business climate, with dredging and salvage company Boskalis NV also saying it was considering a relocation.
Aegon’s history dates back about 180 years as its earliest predecessor, Algemeene Friesche Begrafenisfonds, was set up as a burial fund in the northern Dutch province of Friesland in 1844, according to the firm’s website. The company that would one day become Transamerica was founded in 1904.
The Dutch insurer has about 250 staff at its head office and only a “small number of people may move to the US,” Friese said in the interview. “So unfortunately, we expect head office staff to be impacted heavily on this.”
Some 350 employees at Aegon’s asset management business in the Netherlands won’t be affected, Friese said.
Aegon’s largest business — Transamerica — offers insurance, retirement and investment solutions in the US. Friese said the company is focused on “under-served” clients such as families and medium-sized companies.
After the relocation, Transamerica’s common stock will remain listed on Euronext and NYSE, according to the statement.