AM Best Affirms Credit Ratings of Aegon N.V.’s U.S. Subsidiaries

Rhea-AI Summary

AM Best has affirmed Aegon N.V.'s Financial Strength Rating of A (Excellent) and Long-Term Issuer Credit Ratings of 'a+' (Excellent) for its U.S. life/health subsidiaries. The outlook for these ratings is stable, reflecting Aegon USA’s strong balance sheet and adequate operating performance. Despite past challenges, including lower fee income and capital volatility, Aegon USA is expected to maintain its solid capitalization. The recent sale of Aegon's Dutch operations is anticipated to have minimal effect on its U.S. business strategy.

Positive

• Affirmed Financial Strength Rating of A (Excellent).
• Stable outlook for credit ratings.
• Very strong balance sheet strength.
• Adequate operating performance observed.
• Long-term strategic focus on less capital-intensive business.

Negative

• Recent equity market volatility impacted operating performance.
• Lower fee income due to declining account value balances.
• Inconsistent overall top-line growth with direct premium decline in 2021.

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings of “a+” (Excellent) of the U.S. life/health (L/H) subsidiaries of Aegon N.V. (Netherlands) [NYSE: AEG]. Aegon’s U.S. L/H companies are Transamerica Life Insurance Company and Transamerica Financial Life Insurance Company and referred to collectively as Aegon USA Group (Aegon USA). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Aegon USA’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management.

Aegon N.V., Aegon USA’s ultimate parent, announced on Oct. 27, 2022, that it has reached an agreement to sell its Dutch pension, life and non-life insurance, banking, and mortgage origination operations to ASR Nederland N.V. At present time, AM Best expects this transaction to have a minimal impact to the group’s overall U.S. operations and will continue to monitor the developing transaction closely for any significant changes to the overall strategic focus of Aegon USA.

AM Best expects Aegon USA to maintain its very strong balance sheet strength assessment in the near term, with the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). The recent equity market volatility and realized losses in the fixed income portfolio were related to divestments made to protect the liquidity position, which pressured operating performance and drove down the group’s risk-adjusted capitalization. Additionally, the group reported lower fee income as a result of declining

account value balances, which was offset by expense savings and normalization of claims through the most current reporting quarter. Moreover, the mortality experienced as of June 30, 2022, attributed to COVID-19, was less impactful than expected. Earnings volatility continues despite divestment of certain run-off blocks of business, and AM Best notes that Aegon USA’s overall top-line growth has been inconsistent, where direct premium declined in 2021; however, premium has shown signs of a rebound through mid-year 2022.

Aegon USA’s overall business profile remains favorable with a longer-term strategic focus of building a less capital-intensive book of business, driven by targeted growth and strategic exits in certain lines. The group’s diverse product range contributes to operating earnings, which include traditional life, variable life, variable annuities, mutual funds, pensions, and accident and health insurance. The company benefits from good diversification geographically and by product type. Additionally, AM Best views variable annuities with living benefit riders as displaying some of the highest risk characteristics, as well as being vulnerable to tail risks.   

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2022 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

View source version on businesswire.com: https://www.businesswire.com/news/home/20221103006326/en/

Igor Bass

Senior Financial Analyst

+1 908 439 2200, ext. 5109

igor.bass@ambest.com

Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com

Wayne Kaminski

Senior Financial Analyst

+1 908 439 2200, ext. 5061

wayne.kaminski@ambest.com

Al Slavin

Communications Specialist

+1 908 439 2200, ext. 5098

al.slavin@ambest.com

Source: AM Best

FAQ

What did AM Best affirm for Aegon N.V. (NYSE:AEG)?

AM Best affirmed Aegon N.V.'s Financial Strength Rating of A (Excellent) and Long-Term Issuer Credit Ratings of 'a+' (Excellent) for its U.S. subsidiaries.

What is the outlook for Aegon N.V.'s credit ratings?

The outlook for Aegon N.V.'s credit ratings is stable.

What impact will the sale of Dutch operations have on Aegon USA?

The sale of Aegon's Dutch operations is expected to have minimal impact on Aegon USA's overall operations.

How has Aegon USA's balance sheet strength been assessed?

Aegon USA's balance sheet strength has been assessed as very strong by AM Best.

What challenges has Aegon USA faced recently?

Aegon USA has faced challenges such as equity market volatility and lower fee income, affecting its operating performance.