Reinsuring its UK protection insurance book as part of the sale to Royal London is expected to cost Aegon around €29m (approximately £25m).
The insurer revealed the figure as part of its interim results for the first half of 2023, but said the sale “does not have a material impact on Aegon’s capital position or results”.
On 4 April Aegon announced the sale of its 400,000-strong UK individual protection book to Royal London and under the agreement it will initially reinsure the portfolio to Royal London.
The transfer of legal ownership of the individual protection book is then expected to complete next year subject to court approval.
Aegon closed the book to new business on the same day with pipeline cases given 30 days to complete, while around 40 staff were also put on redundancy consultation.
In June Royal London appointed former Aegon protection sales director Jon Fuller to lead its newly created specialist protection distribution team composed of many of his former colleagues.
UK profit up 19%
In the UK as a whole Aegon reported a €111m (£97m) operating profit during the first six months of 2023 – up 19% from the same period last year.
It noted this was mainly driven by a higher net investment result, which benefitted from favourable equity markets and higher interest rates and “partly offset by the impact of the planned transfer of the protection business to Royal London”.
The insurer also reported more than £1.1bn of net outflows from its retail investment channel with reduced fee income pushing that into an operating loss.
It was encouraged by higher net deposits in the workplace channel, but this was more than offset by higher expenses as it grows the business.
Internationally, Aegon saw growth and improved claims experience in its insurance business, citing improved US mortality claims experience and increasing contribution from growth markets from its accident and health products.
Overall, the insurer reported a pre-tax loss of €232m for the period, down from a profit of €114m in the same period last year, but an improvement from the €841m loss posted in the second half of 2022.
The €232m loss was despite a 3% increase in operating profit by the business to €818m from €796m a year earlier.
‘Solid’ six months
Lard Friese, CEO at Aegon, said the insurer had a “solid” first half of the year.
“Our operating result increased by 3% compared with the same period in 2022, and reflects improved results in all insurance units while asset management was negatively impacted by a challenging market environment,” he said.
“Our net result was a loss of €199m and reflects previously announced items in the US that will position us well for future growth.
“Our operating capital generation was strong, driven largely by our US business. The capital ratios of our main units remained above their respective operating levels in the first half of 2023.
“These results provide a solid basis to raise the interim dividend by three eurocents compared with the 2022 interim dividend to 14 eurocents per share.”
He added: “I would like to thank our colleagues for all their hard work and dedication in ensuring the success of our ongoing transformation.”