This article first appeared on GuruFocus .
Release Date: August 20, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
-
Aegon Ltd ( NYSE:AEG ) delivered strong commercial growth with operating results up 9% to EUR804 million, supported by favorable financial markets.
-
Transamerica's new life sales surged 54% in H1 2026, driven by successful instant decision products and strong World Financial Group agent growth.
-
Operating capital generation increased 27% year-over-year to EUR416 million, reflecting business growth and improved claims experience.
-
Cash capital at holding reached EUR1.7 billion, enabling an increased share buyback program of EUR350 million for H2 2026 and an 11% higher interim dividend.
-
The company is making decisive progress on its U.S. relocation, with key milestones like the EGM targeted for October 8 and U.S. GAAP dry runs on track.
-
For the first time, new business CSM additions in the U.S. exceeded releases, indicating structurally increasing future profits.
-
Asset Management's global platforms operating margin improved to 20%, driven by lower expenses and higher revenues.
Negative Points
-
Aegon Ltd ( NYSE:AEG ) faced a negative impact from annual model and assumption updates, primarily due to policyholder behavior changes, reducing valuation equity by EUR231 million net of tax.
-
The U.S. RBC ratio decreased to 420%, with market movements having a 12 percentage point unfavorable impact, more negative than implied by sensitivities.
-
Net deposits in retirement plans were negative, largely due to a single contract termination following a client merger.
-
Operating capital generation in the international segment decreased, impacted by adverse new business in China and unfavorable claims from storms in Spain and Portugal.
-
The CFO, Duncan Russell, will step down as he decided not to relocate to the U.S., creating leadership transition uncertainty.
-
New business strain increased significantly due to higher life sales, requiring management to use capital efficiency measures like portfolio repositioning to offset it.
-
The group solvency ratio decreased to 169% due to the loss of capital eligibility of perpetual subordinated bonds.
Q & A Highlights
Q: Can you explain the assumption changes made below the line and what was different from expected? A: Duncan Russell (CFO) explained that the annual assumption review in Q2 addressed negative variances related to policyholder behavior seen during 2025. The updates primarily focused on two areas: variable annuity behavior at certain moneyness levels (lapses for out-of-the-money VA products or utilization for in-the-money ones) and the efficiency of premium paying on life insurance products. The changes had a $164 million negative impact on the RBC ratio and were made to improve the quality of earnings and ensure the balance sheet remains strong.
Q: What is driving the remarkable growth in individual life sales, and what are the IRRs and payback periods on those new sales? A: Lars Frieser (CEO) attributed the growth to the launch of digitally enabled instant issue processes for final expense and Index Universal Life products, reducing policy decision time from weeks to under 12 minutes. Duncan Russell (CFO) added that these simplified issue products are earning an IRR of over 12% with a payback period of around eight years on a fully cost-loaded basis, making the returns attractive.
Q: Can you explain the repositioning of savings and investment portfolios and how that can be a tool for the future? A: Duncan Russell (CFO) explained that the commercial strength of Transamerica is driving new business strain, which is a negative from a capital perspective. To manage this and bridge the period of investing in new business, the company repositioned certain savings and investments portfolios from an RBC-regulated entity to a Bermuda subsidiary to improve capital efficiency and support OCG. This is a tool they will continue to use if strain remains high, as they have plenty of flexibility in the balance sheet.
Q: On the financial assets, the locked-in capital has reduced. Does the runoff get you to the $2.2 billion target, or do you need more transactions? A: Duncan Russell (CFO) noted that capital employed in financial assets came down to $2.4 billion from $2.7 billion at year-end, close to the $2.1 billion target. About a third of the improvement was driven by favorable market impacts on variable annuities, with the rest from run-off and asset allocation choices. The company will continue to look at unilateral, bilateral, and transaction options to reduce the portfolio, and with the gap now small, they feel confident in hitting the target.
Q: How much more buffers do you have to release to offset the new business growth and strain? A: Duncan Russell (CFO) stated that the financial position of Transamerica has dramatically improved over recent years, providing significant flexibility in the balance sheet. The first half saw an acceleration of new business strain, but the returns on that invested capital are expected to be attractive, leading to structurally higher earnings on in-force over time. If strain remains high, they will continue to use mechanisms like the Bermuda transfer to fund it.
Q: Can you provide an update on the number of multi-ticket agents at WFG and retirement plan balances? A: Duncan Russell (CFO) said the company no longer discloses the multi-ticket metric but has grown the agent base to over 100,000 licensed agents, targeting around 110,000 by 2027. On retirement plan balances, he offered to provide the details offline.
Q: You've hedged base fees by 20% on the VA block. Would you look to lock in good returns given equity markets have done well? A: Duncan Russell (CFO) confirmed they've hedged about 25% of base fees and could consider doing more given attractive market levels. However, the main constraint is the floored reserve issue, which creates a natural self-hedge as equity markets rise. Floored reserves were just under $500 million at the end of the first half, providing a high level of prudence.
Q: Can you bridge the OCG for the second half and explain the pluses and minuses? A: Duncan Russell (CFO) declined to provide a half-year breakdown, reiterating the multi-year guidance from the Capital Markets Day. He noted that financial markets were helpful, the assumption update will be a small drag, and new business strain will likely remain elevated in the second half due to strong life sales.
Q: What is the reasoning for accelerating the shift towards the aggregation approach on group solvency, and what are the consequences? A: Duncan Russell (CFO) explained that the acceleration was driven by the desire to simplify calculations and reporting, reducing operational complexity as the group transitions to the US and implements US GAAP. There is no change in the outcome of the ratio other than a positive impact on the UK, which is now expected to be around plus 10 points versus the previously guided minus 5 points.
Q: Where are you on long-term care, which is still the biggest chunk of capital locked up in financial assets? A: Duncan Russell (CFO) noted that long-term care required capital is just under 50% of total required capital in financial assets, with reserves peaking in the early 2030s. The company continues its strategy of implementing actuarially justified premium rate increases and looking at other options. Recent market transactions show counterparties are getting comfortable with standalone LTC, which the company will assess on an economic basis.
Q: How confident are you that the mortality risk on the instant decision products is properly covered? A: Duncan Russell (CFO) reassured that pricing and returns on new business are fundamental to Aegon, with an IRR of around 12% and payback of nine years. The company receives rapid feedback on policyholder behavior, lapses, and claims, allowing adjustments. There is no relaxation in underwriting standards, and they are utilizing additional information to price risk.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
