Ladies and gentlemen, on behalf of Aegon's Executive Board and Supervisory Board, I welcome you to Aegon's 2023 Annual General Meeting of Shareholders. This meeting will be chaired in English. Simultaneous translation into Dutch is offered. Headphones for the simultaneous translation were provided to you when you entered the room and are still available outside this room. For English, please choose channel one. For Dutch, please choose channel two. I now open the meeting and welcome our shareholders. We're pleased to see you again, and I see many familiar faces here as well. Next to the shareholders who are here in The Hague, we welcome the shareholders who are participating virtually through a live webcast. They also have the possibility to ask questions and to vote in real time during the meeting.
To accommodate live voting and keeping in mind the short delay in the webcast, the voting is now opened and will remain open until the last voting item on the agenda. The voting results will therefore be shown at the end of the meeting. Our shareholders have also been able to cast their votes prior to this meeting, either by granting a proxy or by using the e-voting system. Present with me on stage are the following members of the Supervisory Board: Corien Wortmann-Kool, Vice Chair of the Supervisory Board, Ben Noteboom, Chair of the Remuneration Committee, and Caroline Ramsay, Chair of the Audit Committee. I also welcome Dona Young, who is nominated for reappointment as member of the Supervisory Board and who's participating virtually. The other Supervisory Board members attend the meeting in a virtual manner as well.
Also present with me on stage are the members of the Executive Board, Lard Friese, Matt Rider, as well as Bieke Debruyne, Company Secretary. Joyce Leemrijse, our notary from Allen & Overy, and Rogier van Adrichem, our external auditor of PwC, are present here in the room. On the front row in the room, the following members of the Management Board are present: Allegra van Hövell-Patrizi, Astrid Jäkel, Onno van Klinken, Bas NieuweWeme. The other Management Board members are following the AGM through the live webcast. Before we continue, I have a few general remarks. For our shareholders present here in person, please note that audio or video recordings are not allowed throughout the building. For the voting, please note that you can already use the link to the Lumi page, webpage. In case you experience any difficulties, please notify our staff.
Upon registration, you have received a voting card. Oh, I'm sorry. The card will only be used if the voting webpage does not work due to technical issues. I'm sorry. Just to be clear, you'll only use the card if the voting webpage does not work. I establish the following: This meeting was convened in accordance with the required formalities. The agenda, with explanatory notes and further meeting documents, were put on Aegon's corporate website on April 13, 2023. The meeting documentation was also made available for review at Aegon's head office in The Hague. The attendance list of this meeting is currently being drawn up. We will come back later, we'll come back later on this point.
The final minutes of our previous annual general meeting of shareholders, held on May 31, 2022, have been made available as of November 29, 2022, at our head office in The Hague and on Aegon's corporate website. Also, the draft minutes of our extraordinary general meeting of shareholders, held on January 17, 2023, have been made available for comments on Aegon's corporate website for three months as of April 17, 2023. The final minutes of this meeting will be made available as of July 17, 2023. The minutes of today's meetings will be kept in English by the company secretary. The draft minutes of this meeting will be available for comments on the website for three months as of August 25, 2023. The final minutes will be available as of November 24, 2023. I wish you all a good and interesting meeting.
We will now move to agenda item 2, the annual report and annual accounts of 2022. Lard Friese, Aegon CEO, will give a presentation on the course of business in 2022, including financial results. After the presentation, we will address your questions regarding agenda items 2.1 and 2.4. Lard, the floor is yours.
Thank you, Bill, good afternoon, everyone. Dear ladies and gentlemen, dear fellow stockholders, 2022 will be remembered as a pivotal year for Aegon and its stakeholders. We made significant progress with the implementation of our strategy, we delivered on several of our financial targets ahead of schedule. We remain focused on helping our customers navigate a highly volatile economic and geopolitical landscape that has presented significant challenges. It was also a testing time for investors, given the instability in equity and bond markets and uncertainty around inflation expectations. Against this challenging backdrop, we continued to execute our strategic agenda that we first announced at our Capital Markets Day in late 2020.
In 2022, we took further steps to deliver on our ambition to be a high-performance company that is a leader in its chosen markets, guided by our purpose of helping people live their best lives. We maintained a high pace in transforming Aegon by optimizing our portfolio of businesses. In October of last year, we took an important step and announced the decision to combine our Dutch pension, life, and non-life insurance, banking, and mortgage origination activities with a.s.r., creating a leader in the Dutch insurance industry. We have exited various businesses that are subscale or active in small or in niche markets. A key example is the divestment of our businesses in Central and Eastern Europe, which have been sold to the Vienna Insurance Group. This transaction is being closed in several stages.
The sale of the businesses in Hungary and Turkey was completed in 2022, allowed us to return EUR 300 million to our stockholders and reduce our leverage. We expect to complete the sale of the remaining businesses in Poland and Romania shortly. We created value by reallocating capital from our financial assets to our strategic assets, which are businesses with a greater potential for an attractive return on capital, and where we are well positioned for growth. We also made important progress on our operational improvement plan. By further strengthening our balance sheet and improving our risk profile, we delivered on our financial commitments. Please allow me now to provide more details on how we delivered on our improvement plans.
In 2020, we began taking steps to transform the company to improve our performance and ensure that we create value for our stakeholders. Through a rigorous company-wide operational improvement plan, initially comprising of over 1,100 initiatives, we introduced new ways of working to improve Aegon's operating performance by reducing costs, by expanding margins, and by growing profitably. While executing on all the initiatives, we embedded a focus on efficiency and operational execution in the organization. We also established a routine of setting ambitious, yet realistic, expense savings and growth targets with a clear focus to deliver. All in all, we created a culture of transparency, early escalation, and focus on developing talent to support new ways of working, and to build a lasting execution muscle.
From a financial perspective, the operational improvement plan already resulted in an operating result uplift of EUR 627 million as of year-end 2022. We have therefore outperformed our expectations of achieving a benefit of EUR 550 million from the program, not only in numbers, but also one year earlier than expected. In October 2022, we announced the agreement to combine our Dutch businesses with a.s.r., with that, accelerating our strategy of releasing capital from mature businesses and becoming a leader in markets where we are well-positioned for growth. Through this transaction, we are creating the number two Dutch insurance company. The new combination will lead to substantial synergies and benefits for customers, business partners, employees, and shareholders.
We also establish an attractive long-term asset management partnership with ASR, which will strengthen Aegon Asset Management's capabilities in the focus areas. As part of the transaction, we will receive a cash consideration and a 29.99% strategic stake in the company, through which we will benefit from ASR's improved operating capital generation and capital synergies over time. It is our intention to use the cash proceeds for capital return to stockholders and deleveraging, consistent with our disciplined capital management approach. In 2022, we realized strong commercial growth in most of our chosen markets. We also saw outflows in our asset management business and in the U.K. retail channel as a result of an uncertain macroeconomic environment. In Spain and Portugal, China and Brazil, as well as in the U.S., we achieved profitable growth in our life insurance businesses.
The workplace channel in the UK recorded the highest level of net deposits in the past four years, demonstrating the improvements we are making to our UK franchise. Our commercial results underscore the importance of offering customers a broad range of products. Supported by the commitment of our employees across the company, we will continue to introduce new products, improve the customer experience, and further build on our distribution strength. We furthermore made good progress maximizing the value of our financial assets. Our active approach to risk and capital management has improved the risk profile of these activities and reduced the volatility of our capital position. Now, as you can see, Transamerica, in particular, has taken several actions to strengthen its capital position and increase the predictability of its capital ratio.
This includes setting up a voluntary reserve for variable annuities, achieving additional long-term care rate increases, and freeing up capital by reinsuring the legacy universal life portfolio of Transamerica Life (Bermuda) Ltd., our Asian high-net-worth business. Furthermore, the dynamic hedging program, which we expanded in 2021 to include all variable annuity guarantees, continued to perform well in difficult markets during 2022. In line with our strategy, we will continue to maximize the value of our financial assets and use the capital released from these businesses to further accelerate our transformation. Because at that time, we set the targets for the years 2021-2023. The actions that we have taken have supported the financial results that we have achieved since our Capital Markets Day in 2020.
Through a rigorous operational improvement plan, we have achieved expense savings, which contributed EUR 366 million to our operating result in 2022. As mentioned earlier, the overall benefits from the operational improvement plan, from both expense savings and growth initiatives, have exceeded our expectations, and 1 year earlier than expected. Now, it goes without saying that we're not done, that improving efficiency and driving commercial momentum remains a key focus areas for us going forward. Our free cash flow amounted to EUR 780 million in 2022. In the last 2 years combined, we achieved EUR 1.5 billion of free cash flow. This means that we have delivered 1 year early on our cumulative free cash flow target of EUR 1.4 billion-EUR 1.6 billion for the period 2021-2023.
Our gross financial leverage is in line with the target we set ourselves two years ago, we intend to further reduce our leverage by up to EUR 700 million, using part of the cash proceeds from the a.s.r. transaction. Our proposal for the final dividend, which is, of course, on the agenda today, brings the total dividend over the year 2022 to EUR 0.23. For the full year 2020 through 2023, we target a step up to around EUR 0.30 per share, which is well above the level we targeted at the 2020 Capital Markets Day. We also announced a new share buyback program of EUR 200 million in February 2023, after having completed last year's EUR 300 million buyback program.
On top of all this, we intend to return EUR 1.5 billion of the cash proceeds to stockholders once the ASR transaction has closed. This is a testimony of our commitment to offer attractive stockholder returns. Aegon has had a good start to this year. In the first quarter, we demonstrated strong commercial momentum and advanced on our strategic priorities. I'm especially pleased with our progress in light of the continued global volatility, specifically in financial markets. Our strong balance sheet and our disciplined investment approach put us in a strong position to navigate the current macroeconomic environment and execute further on our strategy. We have significant financial flexibility, with strong capital positions in the units and cash capital at the holding near the upper end of the operating range. Additionally, Aegon maintains a conservative and well-diversified fixed income portfolio.
Our US corporate bond portfolio is defensively positioned with an overweight to higher-rated bonds relative to the benchmark and is diversified across industries. In the Netherlands, as well as in the US, we are invested in mortgages. The Dutch mortgage book is focused on residential housing and has a low loan-to-value ratio, and is known for its very low delinquencies, even in unfavorable economic environments. Similarly, the commercial mortgage loan portfolio in the United States has a low loan-to-value ratio of 50%. More than half of the book is invested in multifamily residential properties, and the book has limited near-term maturities. In addition, Aegon owns about EUR 6 billion direct real estate in the Netherlands and in the US combined, with just EUR 200 million exposure to offices. Let's now move to our sustainability agenda.
By the way, the last week when we published our trading update, we gave an appendix, and in that appendix, we gave more detail, of the quality of our investment portfolio, which is an excerpt of that I just shared with you. If you're interested, that's where you can find it. Moving to our sustainability agenda. In 2022, we strengthened our governance and our reporting, and we took steps to further embed sustainability in the business and made good progress towards our commitments on climate change and inclusion, and diversity. As a member of the Net Zero Asset Owner Alliance, we have made a commitment to transition Aegon's investment portfolio to net zero emissions by 2050.
We are well on our way towards the intermediate target to reduce the carbon intensity of our corporate fixed income and listed equity, general account assets by 25% in 2025 versus the 2019 baseline. We have set a target to reduce the carbon footprint of our own operational activities and realize a significant reduction in our carbon emissions. A large part of that reduction is due to changing work practices with more people working from home. As a result, we have globally reduced quite a lot of footprint, physical footprint, office square meters. We're also making progress on our vision for Aegon to be a fair and inclusive company.
We adopted a global inclusion and diversity strategy in 2022, and we appointed a global head of inclusion and diversity and are steadily increasing the number of women in senior leadership positions. We continue to further enhance our sustainability agenda with additional commitments, including, 1, investing $2.5 billion in activities to help mitigate climate change or adapt to the associated impacts by 2025. 2, by engaging with at least the top 20 corporate carbon emitters in our portfolio by 2025. 3, continuing the trend of increasing female representation in senior management. Embedding sustainability into our day-to-day activities is a key element of being a high-performance company, and it creates value for all our stakeholders.
To wrap it all up, in 2022, we have significantly accelerated our strategy execution, and equally important, we have delivered on our financial commitments. We created new ways of working at Aegon and are delivering on our sustainability agenda. Looking ahead, we remain fully focused on executing our strategy. We are continuing to improve the performance of the company. We are investing in profitable growth by introducing new products and expanding our distribution footprint. We remain disciplined in our capital and risk management, and we continue to provide attractive returns to our shareholders. I am confident in delivering on our financial and strategic commitments for the year 2023 and beyond. Above all, I am very proud of all our colleagues who work hard to make our strategy a success and who continue to support our customers' needs every day.
I look forward to provide more details on our strategy at our Capital Markets Day in London on June the 22nd. Thank you very much. Bill?
Thank you, Lard. Before addressing your questions, I will inform you about the attendance list of this meeting. In this meeting are present 35 holders of Common Shares and Common Shares B. They represent, together with shareholders who have voted through the e-voting or via proxy voting, a total of 1,338,324,410 shares. Votes, sorry. That this number represents 69.15% of the 1,935,434,808 voting shares, and of the issued and outstanding capital as at record date of this meeting. We will now address your questions regarding agenda items 2.1 and 2.4, the adoption of the annual accounts 2022.
Prior to this meeting, our shareholders were able to ask questions in writing. We received one question in writing prior to this meeting. We will address this question under agenda item seven, any other business. We will first answer the questions from our shareholders present here in the room. Thereafter, we will address questions from our shareholders who are participating virtually. They can ask their questions through the chat function. As this function is open throughout the meeting, I mandated our Head of Investor Relations, Jan-Willem Weidema, to moderate these questions. I invite virtually participating shareholders to enter the questions now, so we can address them immediately after answered the questions from our shareholders in the room. We believe that this approach will ensure a constructive dialogue with all our shareholders. May I now invite shareholders present here to ask their questions.
Please go to the nearest microphone and clearly state your name for the minutes. To give all our shareholders the opportunity to ask questions, I will ask you to limit your number of questions or comments to 3 at the time. Questions that cannot be answered during the meeting will be answered afterwards. These questions and answers will be added to the minutes. May I please remind you that questions should be related to the agenda items. You can ask your questions in Dutch, if preferred. They will be answered in English with a simultaneous translation into Dutch. I can see I have someone who's ready to start. Please proceed. Thank you.
Good afternoon, I'm Alexander van der Graaf. I'm a private investor. I have two questions about this item. The first is the value creation that Aegon always envisages, and by value, I mean the value of the company and the market capitalization, so the stock market value of Aegon. By creating value, the stock market value of Aegon over time would consistently rise. Moreover, that higher level can generally be retained, and at that point, one would expect a share price with higher peaks, and that last would also indicate that the share price has much deeper troughs. For years, Aegon has addressed long-term value creation in presentations and annual reports. I would advise you to stop using these terms for the time being, since I believe that you have made a laughing stock of yourselves.
I apologize for these words, but that's the truth. These are fine stories, the critical reader will see right through them. Even the announced sale of Aegon Nederland, has yielded nothing, because on the stock market, the stock market looks ahead, but investors apparently don't see this as such a wonderful option as yielding value. If this deal with a.s.r. was such a wonderful move for Aegon, the Aegon share price would have increased far more. For years, there has been no actual value creation at Aegon, and Aegon is mistakenly continuing to use these terms. A humble apology to shareholders for the reduction value, in my view, would be in order. We've been waiting for that value creation for years, but it has not been forthcoming. I don't know how you understand this term.
Perhaps, these are simply words to fill presentations and reports and are meaningless, but somebody who reads or hears them now finds them laughable. As long as you have not created significant value, I suggest that you abstain from these terms. For a long time, this has not been something to be taken seriously. Do you admit that Aegon has failed miserably in creating value? My second question concerns Aegon's specific strategy. At the extraordinary general meeting at the beginning of this year, I also asked critical questions about this, but it remains somewhat unclear to me. Since Mr. Fries is CEO, Aegon has emphatically communicated that there are three focus countries, the Netherlands, the United Kingdom, and the United States. Those are said to be the core markets, the Netherlands, the United Kingdom, and the United States.
In the most recent annual report published, we see that again on page 18. Core markets: the Netherlands, United Kingdom, and United States. At the extraordinary shareholders meeting at the start of this year, I indicated that the sale of Aegon Nederland, in my view, does not align with the vision previously communicated. Recently, Aegon announced that some of the operations in the United Kingdom would be sold, and that the sale in the Netherlands would be followed by a sale in the United Kingdom. That's another divestment from a core market. Where will the investment be that will be highly profitable, is my question. What does Aegon intend to do for the future? Given the deplorable share price, I hope that Aegon is not preparing behind the scenes to be taken over. Is Aegon being secretly prepared to be sold?
Thank you, Mr. van der Graaf. Lars, I think this is for you.
Yes, thank you very much. Thank you, Mr. van der Graaf. Let's start with the value creation. When I started on May 2020, the stock price was EUR 2.08. No, it wasn't. I mean, that's the stock price, EUR 2.08. The stock price now.
That was a distorted impression.
That's true. Over the longer time, but I'm just trying to give you some facts. You know, when I started, the stock started at EUR 2.08, the stock now is EUR 4.29. In the meantime, we have improved the quality of the free cash flows, and as a result, the dividends per share, hopefully has been, by the way, approved today as well, will go up and actually faster up than that we had anticipated when we started. The third fact that I can give you is that we also provided additional returns to stockholders in the form of buybacks.
the EUR 300 million buyback that we have announced last year, and the EUR 200 million buyback that we have announced a couple of months ago, and we are busy buying in those stocks. Those are facts from the last couple of years that I can oversee. What is also a fact is that a stock price, and with that, the market capitalization of the company, needs also to be seen in the context of markets. How are you performing versus peers, right? Because we are one kind of a company. We're not a tech firm, we're not a, we're not a consumer goods firm, so we need to compare ourselves on how we are doing.
We are doing that, obviously, and we're doing that actually on a daily basis. If you look at the relative performance versus our peers over the last 2 years, you will find that you need to look for the peers, which are, 1, those who are in life insurance, pensions, and in asset management. Do not our peers are not companies who are in property and casualty. Those are not our peers. If you would make that analysis, you would find that we have been outperforming U.S. peers for quite a bit, and save 1 or 2, but we're in the top quartile of that. Also in the last period, you can see that we've been performing well in line with European peers, with a similar business model than we have, as we have.
You're not alone. The third element to how the stock price moves is, of course, the market in general. As you, as an investor, know very well, the market over the last couple of years has been quite volatile, given inflation, given the macroeconomic backdrop, given topical issues like the debt ceiling discussions right now in the U.S., that provide temporary volatility, and the interest rates, of course, which have gone up quite substantially in a very short period of time. All these things are inputs in the way the company is being valued by investors. The most important input is what management is doing to ensure that the company performs better relative to its peers. When I started in 2020, I made it clear that I agreed with you.
I agree with you, that the company's long-term performance was not what it should be, and that we have launched a program in a number of areas to improve the performance in the longer term. There were four areas. First one was that we said our strategy is not clear, and we should make it clear. We have, and this goes to your second point. We have said, indeed, that our core markets are the U.S., the U.K., the Netherlands, and that we will focus on Spain and Portugal, China and Brazil, and the global asset management business. That all the other companies in the other... Because we were in 22 markets or something, all these other companies, we would either run very tight capital, meaning that they don't consume a lot of capital, or we would divest them over time, which we have done.
The second thing is that we have said we need to perform better from a cost perspective and from a margin perspective. We have launched an operational improvement program to improve it. We set targets for it. We overachieved it, and I, in my opening statements, I made that, I gave you an accountability of that or an account of that. The third element was that we would reduce the risk profile of the company, because the company had a lot of volatility in its capital positions, and you will have observed over the last couple of years that every quarter we were able to report very solid, calm, capital positions with the operating units above their target ranges, operating ranges, and with the group also in good solvency positions.
Free cash flows have increased and are of better quality. The fourth and final element was that we said we need the operating of the model to be tighter, more disciplined, and quicker, and keep a good pace. Also there, I think we've made a lot of progress. The your assessment that the overall performance over a longer period has not been great, I agree with. I agree with. We have done a lot of work over the last years to start repairing that. I can only conclude that if I look at the scorecard that I keep, that we, versus my peers, et cetera, that we are on the right track. Now, in order for it to get to levels where you are more happy with, we need to have more time, and we need to do much more work, and there is much more work needed.
That's on the first piece. On strategy, yes, We indeed had this exchange, I think, at the EGM, Mr. van der Graaf, where you said: Look, you're saying that the U.S., U.K., the Netherlands, are your core markets, but you've done a deal with a.s.r., and you've sold your Dutch business to a.s.r. How can it be a core market for you? Now you're adding to that, you just sold the protection business in the U.K. That's another core market. Let me respond to that. The first one is about the U.K. That's the Let me do that first, because that's a new element of it. In the U.K., we are focused on two core business lines. One is retirement plans, pension plans, to companies and their staff. We call that the workplace solutions business.
That business is growing. In the fourth quarter of last year, they had the best quarter in four years. Also this quarter, which we reported last week, they have continued good momentum. That business is really starting to grow well. The second line of business is the retail business. That's a platform that we operate where advisors advise their clients on their investment portfolios, and we take those assets on our platform, and for that, we take a fee. That is a business which has not done very well yet, and we have conceded already two years ago when I started, that that needs more investments to get right. Another business is the protection business. That is a business which was not selling new products, hardly, and was also not core to our UK team in the UK.
In order to improve their management focus on the 2 big business lines that they have, they have decided with, of course, we have decided that on their proposal, to divest that book of business to Royal London, which is just increasing their focus on the 2 business lines that really need to grow. My view is a portfolio optimization that we did in the UK. Going back to the Netherlands. In the Netherlands, we have done the transaction with a.s.r. We were, or we are still, by the way, but let's say post-closing, we are a 30% owner, nearly 30% owner of a very large, diversified, very strong number 2 insurance group in the Netherlands. That stake represents EUR billions of value for us.
We also have asset management activities post-closing in the Netherlands that are still part of our group in the Netherlands, and that asset manager is going to have a long-term partnership with the combined new insurance group. The Netherlands is indeed core to our group and remains core to our group. The way we extract value in the Netherlands, we are going to do differently. We own 100% of a business that was smaller. Now we own 30% of a business that is much, much bigger, better diversified, and through integration, we can create a lot of value. The Netherlands will remain to be core to our group.
Thank you, Lard.
Thank you for your reply. Back to items 1 and 2. As for item 1, if you increase a very low share price, it's quickly a strong increase, but it's not really that impressive. I would suggest that the value creation Aegon mentions should be properly visualized at some point. As for item 2, I had another question: Where are you investing to obtain a high yield?
We invest in a number of things. We invest a lot, in growth, for instance, in the United States. In, in product lines in the United States that we have identified, the life business, the workplace solution business in the US. You've seen, over the last quarters, the growth also coming through, and that requires a lot of investments. Don't forget that when we started, the US was repatriating every year, $900 million of cash to the holding company. We have said, "No, no, no, that's too much.
We need to reinvest in that business." The level that they're currently at, EUR 550, is the level that is, of course, much lower than the EUR 900 that they did in the past, because we invest in that new business to make it grow, et cetera, which is now also generating the right returns. That's one example. We also make bolt-on acquisitions like we did in the U.S. last year. We also invest in the U.K. business, we invest in our markets in Brazil, and we invest in China in order for these markets to grow, and they have.
Okay. Thank you. Yes, I hope that the value creation will be visible, and that we'll notice what we're talking about here.
Thank you. We will continue to work.
There's someone in, two, please.
Thank you. Good afternoon. My name is Fleurine Kitz-van Heiningen, and I'm speaking on behalf of the Dutch Association of Investors in Sustainable Development. For each year, we engage with Dutch companies on sustainability-related issues, and I would like to thank you for the constructive dialogue prior to this AGM. We have compiled three questions relating to biodiversity, lobbying, and labor conditions. My first question relates to biodiversity. It's positive to see that Aegon is aware of the increasing importance of biodiversity. For example, Aegon, the Netherlands, has signed the Finance for Biodiversity Pledge. At the same time, Aegon has announced its merger with that it will merge its Dutch operations with a.s.r.
Since only Aegon, the Netherlands, has signed the Finance for Biodiversity Pledge, VBDO wonders if the biodiversity ambitions of Aegon after the transaction with a.s.r. will be as ambitious as they are now, especially since Aegon will be more active in markets that are generally less focused on sustainability topics such as the U.S. VBDO understands that the challenges that come along with operating in markets that are less focused on sustainability topics, but we also believe that Aegon can and should be a sustainability front-runner in those markets. Therefore, VBDO has the following questions: Is Aegon willing to commit to the Finance for Biodiversity Pledge? Second of all, which steps will Aegon take to ensure that group-wide, the sustainability strategy of Aegon will not lose its pace? My second question relates to labor conditions.
The trade union, CNV, has shared its concerns about the merger of a.s.r. and Aegon in the Netherlands with Dutch newspapers. It is not clear yet how many employees will lose of a.s.r. and Aegon will lose their jobs. Since a.s.r. states that the combination will save costs, CNV deems it likely that there will be layoffs. How will Aegon ensure the position of its employees is well taken care of? My third question, which relates to lobbying. This is a new theme that we introduced as engagement theme. We find it very positive that Aegon is already reporting on the cost of its political advocacy. It's also engaging with policymakers in the EU and USA. We are also pleased that the lobby objectives are focused on addressing climate change.
We could not find information about Aegon's lobby activities with industry, through industry associations. As a result, we are not able to determine to what extent the objectives of Aegon are in line with material sustainability objectives, such as the Paris Agreement. Studies have shown that around 89% of industry associations do not always lobby in line with the Paris Agreement. A real risk exists that Aegon, perhaps unintentionally, is supporting unsustainable lobby practices, even in the absence of concrete evidence of such practices. My final question is: Is Aegon, during the coming year, willing to disclose a detailed overview of the lobby activities of its aligned industry associations, and to engage with those associations that do not lobby in line with the Paris Agreement? Thank you.
Thank you. Clear questions. Laura?
Yes, thank you very much. Thank you for your for your questions. Let me start with the last one.
Yes.
You're the lobby. We have no objection to disclosing what associations memberships we have. We cannot guarantee that we can give you an exhaustive list of all lobby activities conducted by all these associations for whom we are a member. We also believe that there is a difference between what you can call real economy companies and financial services companies, if I may make the difference that way. Real economy companies like companies that are, for instance, heavily emitting industries, et cetera. We are a financial services company. We do have a footprint. We're working hard to bring that back, but it is a very different kind of exposure.
I think for those kind of companies that are heavily emitting, it may make more sense to hold that company account for membership of associations that do not lobby in line with the Paris Agreement. I could imagine that for financial service companies like ours, that will be less relevant. Again, no objection to disclosing the memberships, but an exhaustive list, I cannot guarantee that we will be able to do so. On your second question, this is around our employees in the context of the transaction with a.s.r. Well, first of all, we have not closed that transaction, so until such time as we've closed it, nothing will change for our employees. Everything remains as is. After closing, under the leadership of Jos Baeten and his team at a.s.r., the integration will start.
The integration of the activities aims at maximizing the potential that the company create by putting the activities together and fully benefit from its scale and reach. First of all, that integration process is led by ASR, I cannot, you know... I don't know their plans for that, and you should ask it there, I think. In general, I can say that the integration process is expected to take a number of years. This is not something that's done in a very short period of time. ASR has publicly stated that they cannot exclude that the integration will also lead to redundancies. They cannot exclude it.
At the same time, a.s.r. has also said details of the integration needs to be worked out, works councils need to be asked advice over this, et cetera, so that will happen on a step-by-step basis. I think we also need to point out that the integration efforts and the potential loss of jobs is mitigated by a number of things. First of all, that a.s.r. and Aegon Nederland N.V. are very complementary in many business lines. While there are overlap in some business lines, there's also a lot of complementary nature of these business lines that will mitigate it. Also, both companies have currently quite a number of vacancies. This is quite a tight labor market, so that will also help to mitigate this risk. Then there is time.
Time always helps, because natural attrition is always a helpful dynamic here to ensure that this can be done in a mitigated manner. In the long run, we believe that the combination of this company is actually good for jobs, because it's a well-positioned company, it will be very strong, and as a result, for the future, will be sustainably a very attractive employer. Your first question-
Yes.
to take them from last to first, on biodiversity. As you have noticed, Aegon has no specific biodiversity commitments, and we also have no plans to make those additional commitments on the topic. Doesn't mean we don't find it important, but we have chosen to focus on priority themes of how we can play our part, and that's climate change and inclusion and diversity. We recognize there is a great deal of crossover, of course, because if you talk climate change, biodiversity, protecting the environment, these are all elements, of course, that are hanging together. Aegon Asset Management, for instance, and Bas, as the CEO there, is present here, is part of a collaborative engagement initiative, such as actually your initiative that you're leading on mining and biodiversity.
We also engage with companies on the topic of biodiversity through the active engagement, active ownership philosophy that we have with the companies we invest in. With that, I think I have answered your question?
Yeah.
There was one sub-question, maybe.
Yeah, mainly, which steps you will take to ensure that.
That was it.
Okay.
Thank you very much. Thanks for that, very much. Well, we believe that... This was, by the way, the question, what steps we will take to ensure that a group-wide, the sustainable strategy of Aegon will not lose its pace and certainly not in the context of the transaction that we discussed. First of all, we believe that Aegon, that the combination that we create will be very well-positioned for the future, to extend the role of the Dutch insurance market when it comes to ESG and sustainability. ASR is a company with a very clear commitment in that area. Therefore, we believe that the combination will also continue its pace there. At a group level, our sustainability approach remains the same, also post that transaction.
We have carried out a review of our commitments that we've made in the context of the disentanglement, and we've assessed that there will not be a significant impact on our ability to deliver on the commitments that we have made.
Thank you very much.
Thank you. Thank you. Gentleman number one, please.
Yes. Good afternoon. I'm Mr. Retif, private investor in Aegon. I have the following question regarding the Annual Integrated Report 2022, page 216, regarding other charges. Other charges are related to settlements. In 2022, I read in the annual report that there are settlements, this time in 2022, I only see that the United States is mentioned. If we go to the annual report of 2021, we also see that there is a discussion about other charges, which took place like settlements in the U.S., also in Europe. My question is, what has changed in 2022 report that the Netherlands is not mentioned?
Or maybe I read it wrong, I don't know. This comes also to the following point, because I follow the annual reports since a couple of years. Oftentimes, this is related to, for example, in the U.S., in the past, there have been made settlements with 99% of policyholders, and sometimes with 1% of the policyholders, there were special settlements or it took longer. In the Netherlands, there have been also settlements. I would like to discuss the following, because in 2022, in the annual report, you mentioned that you, Aegon, have settled, for example, in some settlements for 90% with the Sprintplan investors. You repeat that actually from the previous year.
My question is, what has happened there regarding those settlements? Also, what can we expect from settlements for the future? When we look into the annual report, we see there the other charges. The numbers are going up here. Sometimes they remain very low, but in the end, if you open a report, then the other charges, the numbers are growing then. My question is: what can we expect there? When it comes to the settlements, for example, with...
What I know is that you mention in the report that you talk like you have made settlements with 90%, but there is also information that there is a lot of cases which we believe it can never be 90%. Could you maybe explain more about how many settlements you have made over the last years with, for example, the Sprintplan, for example?
Yeah, I would like to address this question. I also would like to say that I think it would be fair for Aegon to settle in the right way, also with people who have invested in the past with Aegon and not give them some pocket change, like EUR 750, if they have lost money by investing actually in an investment fund, which later looked like it was just like a loan, and they paid it off. They paid, actually, they paid interest instead of a monthly payment. My question in the end is: what kind of other charges can we expect, and what can... This is really important, because I'm a stockholder. I think that it's not clear...
In the annual report with the 90%, how has that been done? You also mentioned that in the year 2021, you made an agreement with 90% of the investors. A large group, they got after that day, they were asked to settle, and they have not settled at all yet. My question is: Is the annual report really reflecting the reality?
Okay, thank you very much. That was more than three questions, I think. We'll make sure... I just say that because I want to make sure that we answer all those. Matt?
Maybe I can take your first one on page 216 of the annual report. We are generally talking about settlements of lawsuits that have come our way as a consequence of what we call monthly deduction rate increases on life insurance contracts made in the United States. These are increases generally to cost of insurance charges on existing life insurance contracts that we are allowed to make under the terms of the contract. In some cases, we have been the subject of a class action lawsuit by policyholders who have thought we had applied the mechanism that we applied to make those rate increases was inappropriate.
In these cases, for example, we make a general class action settlement with that group. There are people that opt out of that settlement, and then we deal with those, Let's say, on an individual basis or an institutional basis. These things can be lumpy. Maybe to go to your last comment about are the annual accounts a fair reflection of what our liabilities are? The answer is yes, because if we were able to size the amount of the claim and assess a probability that we would have to pay the claims, then we would be putting it as a provision in the accounts. In many cases, we cannot do that. In terms of your question about what can we expect going forward?
What can we. We never, we would never make comments about what can we expect going forward. We're always, we are always in the, you know, active negotiations in these things. If we could make a provision for it, we would, in general, we can't.
Good.
I would like to comment to that, because sometimes, in every year, we see that, especially in 2019 financial report, that you use the word resurface. Yeah, something resurfaces. That means that people come together and will start a class action suit. Then the report says, well, we were able to deflect it. The Dutch court judge did dismiss it, and then later in 2022, we read again that, yeah, well, we had to make settlements, and we had to pay them out. Of course, we... You have a lot of products out there, which are sometimes for multiple explanations or how you say that-
Okay.
For me, the ..., how do I say that in English? It is explainable often in multiple different ways. I hope you guys don't lose the overview, because what for us, it's important as investors that you That we don't end up always with a lot of settlements because it's out there in the news all the time, Aegon is known there now that there are a lot of lawsuits and cases where people try to get their money back. How is this for us as investors? How, how can we trust you that we get good value? Like our colleague behind me says, we want to see that the stock goes to EUR 10 and not stays around EUR 4.
Okay.
Please comment to that.
Okay. Last comment, then we'll move.
Yes, thanks. You know, with respect to the having an overview of the various litigation, settlement, activity, and so on, please do rest assured that that is our responsibility to indeed have that overview and our dear auditor friends would, I think, agree with that one. We do have that, we do have that overview. Thank you.
Okay. Please.
Good afternoon. My name is Kina. I speak on behalf of VEB. I want to go back to the first shareholder who asked questions, Mr. van der Graaf, who asked some questions about strategy, the performance, and so on. Actually, I recognize a lot of his words, but he presented them in a very polite way. I recognize some of those words in earlier years, like, I've been criticizing Aegon. Having said that, also, I think I said it last year, I think there's a higher sense of urgency within Aegon at this very moment, so there's more reason for optimism than just a couple of years ago. Let me start with that. Having said that, as well, I've got some very interesting questions, which I'm sure Mr. Fries will love.
3, right? No more than 3.
Oh, well, I've got plenty, but I also got a question back to the auditor.
Okay.
Also, this agenda point.
No, next point. We'll do that later.
Good.
Three points, please.
Good. It is related to the strategy. I think I understand it. You make choices, you focus, efficiency, returns, and so on and so on. I'm wondering, what is so interesting about China? I would have understood it 2, 3 years ago. In the meantime, we've become more, but less relaxed about China. That is not just opportunity. At some point, we may not be able to do any business there anymore. Is it wise to consider that as a main growth market for Aegon? A similar question, I can ask about Brazil. Brazil is in continuous political turmoil. There's maybe half year of stability. Then there's a big issue with the government. Is it so wise to consider that as a key market for Aegon? That's the second question.
Mm-hmm.
Third question relates to the asset management. I remember last year that Mr. Fries was very positive about the asset management, EUR 1 trillion, which Aegon is managing either directly or indirectly or having it managed. Aegon is not so afraid that a big portion of this 1 trillion will be managed by competitors. Instead, you want to increase your share of those assets that you're managing or you're having it managed for your customers. I was wondering how it's progressing. Last year, between 35%-40%, EUR 1 trillion you're managing yourself, the rest is competition is doing it better or cheaper. Have you progressed a lot? At the same time, I'm seeing that your operating profit in asset management has dropped a lot, actually a lot more than the markets have dropped.
Can you explain if I should be worried about that? Those are my comments or my questions about the strategy or the performance. Later on, I'll come back with the questions to your auditor. Thanks.
We'll wait for those. Thank you. Lard?
Yes, thank you very much, Mr. Keiner. Geopolitical risk is up, unfortunately. We have in our backyard, a massive war, a horrific situation, and we see growing tensions in... Especially the relationship between China and the U.S. is, of course, a very big concern. China is, as we all know, a vast country with a huge amount of population, where there has been, until recent years, a very strong economic growth, hence, a very attractive potential opportunity for us to further our businesses and grow, and take the benefits of a growing market, a growing middle class, a more prosperous country that, over time, needs more advice, more demand for life insurance products, and also more money to be managed in the form of asset management.
We have seen our two joint ventures that we have there. One business is a life insurance business, selling traditional life insurance products to retail households, and the other one, a separate company, is an asset management company, which we have both companies in joint ventures with local partners. Their trajectory has been strong over the last years, and I would argue, the asset management business has done it better in the last years than the life insurance business. The reason for that is that in the life insurance space, there has been a lot of regulatory change in China, which has hit the entire industry and has temporarily lowered the demand for those products. We are now seeing in the first quarter that the demand is picking up, also post the reopening of China after the COVID pandemic.
The geopolitical risk is there, we are acutely aware of it, therefore, we are cautious in the way we operate in China. The good news is that the partners that we have, especially on the Asset Management side, is a very strong and well-respected partner, and we have seen continued growth in the Asset Management area, which is good. The life insurance side, the growth has been more choppy due to the points that I made early on it. In China, we are acutely aware of the geopolitical risk, of other risks associated with, let's say, on many different fronts, which we with in China, internally. We are acutely aware of it, at the same time, we are there with strong partners.
There is a growing middle class, a massive population, a lot of opportunity to capture for us. Tread cautiously. On Brazil, it is, in our view, slightly different. In Brazil, we have already seen with our partner for the last 12 years, continuous double-digit growth in the development of the business through a combination of good product innovation and build-out of distribution channels. For instance, 2 years ago, we launched a joint venture partnership with one of the largest banks there, which has helped to propel the business forward. The geopolitical risk is obviously also in that market present.
Please note that, we are following that acutely, but please note that the change in the top leadership of, let's say, that country, does not necessarily mean that the infrastructure and the political dynamics in the provinces and in parliament have fundamentally shifted. Not much, quite frankly. In that sense, for us, the environment remains conducive. It is an economy that is growing. We have a very strong and good partner there, and our business has continued to demonstrate resilience and growth, so we're very pleased with that. Finally, your point on asset management. Yes, the asset management results over 2022 were not good. The asset manager was not alone in that. The entire industry has been suffering from the overall market macroeconomic backdrop.
Our asset manager has relatively, in its product mix and in its investment mandates, a higher percentage in fixed income asset classes. Given the rates, rate rises that we have seen, the rises in interest rates, we have seen those bond values coming down. As a result, the fees that we gain are on the back of the values of the assets. The values of the assets have come down. As a result, our fees have come down as well, and that goes straight to the bottom line. Indeed, you have seen, number one, that effect at the asset manager. The second effect is that we've also seen in China that the performance fees that we that were out performances of the Chinese asset manager the year before, were not returning to the same extent in 2022.
There was an add-on effect to it. I concur with you that the asset management business last year had a tough year. We are addressing it in 2 ways. The first one is, we are implementing a new technology platform globally for the asset management business, which will allow us, post that implementation, which we aim to close in the course of this year. Post that implementation, to increase our efficiency and improve our margins. That's number 1. Number 2, we are focusing the manager, the asset management business, more on those strategies that are allowing us for protecting the fee levels, and also those are strategies that we're really good at, and have a competitive edge in versus others.
Real assets, private debt, alternative fixed income strategies, is what we go for, and responsible investments, and those are the areas that we go for. Now, as to the percentage that our asset manager takes from the overall money that needs to be managed, I would say it's been relatively stable. It's not grown much, so we still have that dynamic, that opportunity there. We will never be all things to all people, so do not expect us to take a materially larger share of that. We do believe there are still areas where we can grow our share of that wallet.
Good. Thank you. Any other questions in the room? Yes, sir.
My name is Decker, Mr. Chairman, and I'm a miniature shareholder, so I'm only speaking on my own behalf. Three questions. First and foremost, I'd just like to highlight that I'm very pleased about the fact that after quite a number of rather complex years at Aegon, you decided to adequately streamline the organization. The way I see it, you've reduced the risks that were there for a while, so I'm very pleased about that. Of course, Aegon still is a company that is still dealing with the legacy of a long, long time ago, sometimes even. This is something we always have to keep in mind. I have three questions. First question, regarding the closing of the a.s.r. agreement, is the timing still as you predicted it to be?
Is there a certain point in time in which you really think that you'll be able to achieve the closing? Then a question linked to this, I have rather a remarkable statement that I'd like to refer to. The argument, the reason why for many years I didn't want to be a shareholder of Aegon, I always coined this strange sentence. And it said that we have to be very careful what you wish for, because before you know it, all of a sudden, you could be faced with a storm. This brings me to a detail. Now, the assessment of the problems and the fact that Aegon was never really willing to engage in settlements is something that plays a part here.
My question is, since we can't really get an overview of this situation, what about these claims, these litigations, as far as the Netherlands is concerned, will they be incorporated into the agreement with ASR, or will the claims remain behind at Aegon? This is another issue to be taken into account, since not all of them have been settled. Risk mitigating measures now that they have been taken, do you believe that with Transamerica, you are getting there, or do you think that you still have to take important risk mitigating measures? Would they still be desirable? Could you say something about the exposure? The interest situation in the U.S. is changing rapidly.
For a company such as Aegon or Transamerica, that doesn't have to be detrimental, but it's very difficult to assess what the effects of the interest rates could be. It's not about the level of the interest, but interest rate changes, of course, have led to quite a number of problems, and we've seen that a couple of banks also collapsed on the back of that.
Thank you for those questions. Mark, anything?
Thank you very much, Decker. To start with the last piece, interest rates up are good for Aegon, are good for Transamerica, because our products will become more attractive to our customers. The guarantees that we gave to our customers and options in the back book of our portfolio and the capital that we need to hold for that, you know, if you discount the liabilities against a higher interest rate, they weigh less on the balance sheet. That is good news for us. You are very right that if interest rates rise very quickly, that there is not an immediate effect that you are seeing in the, in the P&L, if you will, or in your returns, and that you also need to use a lot of the cash flow that you have to manage liquidity risk in your company.
The good news is that we have, of course, been tested on that in 2022, as interest rates in the US, but also in Europe, have very quickly increased from nearly 0% to more than 5% in the US and more than 3% in Europe. At all times, we've been able to manage the liquidity demands for our hedging portfolios and our derivative portfolios, for instance, very well. In that sense, that is good. We believe that the improvement of the higher interest rates will become more visible in our financial results over time. First, when interest rates stabilize at a higher level, and then over time, you will see that coming through. The money that we get in, we need to reinvest that against higher rates, so that is positive for us as a company.
When it comes to Transamerica's risk profile, we have changed a lot in that risk profile by introducing and broadening a hedge strategy around our variable annuity book, which has provided already a number of quarters of very high hedge effectiveness, more than 97%. Which has calmed down the entire financial profile of the company, and the same goes for the volatility of the capital positions. You can just look at the capital positions that we reported over the last year and a half, and you will see that in spite of all the volatility, it's been a very calm picture, and that is, I think, proof testament to all the underlying risk mitigation that we have taken. We will continue, Mr.
Decker, to mitigate further where we can and where we find opportunity, because we believe that predictability and quality of cash flows, as that increases, it will help the value, the valuation of the company. When it comes to closing of the a.s.r. transaction, we have said at the time that we aim to close the transaction with our regulators in the second half of this year, and we still maintain that view. The second half is a wide range. It can be Christmas, it can be summer. Let's hope that it's more to the earlier end than the later end, but we are progressing very well and working very hard with our regulators and with a.s.r., to do that.
Where it pertains to legal risk, I think my colleague, Mr. Matt Rider, has shared some of that in his comments on the earlier question. You know, some of these cases take longer, as we know, and we are disclosing that in our annual report. We have been able to resolve many of them, a lot of them, but some cases are still under litigation because we have a different view than the people who are litigating us, and that just needs to go through the legal process. Those processes can take a lot of time, as you know, depending on the jurisdiction, but depending on the workload that many of the legal magistrates have.
We just have to await the outcome of those, and we are disclosing that adequately and well in our annual report on where that stands.
The question was, whether those liabilities will go on to a.s.r.?
They will, yeah. The Aegon Nederland N.V., any claims or rights for policyholders are with Aegon Nederland N.V. and its subsidiaries. That legal entity that moves to ASR, but it does not change the rights of our policyholders, that they have, so that they have vis-à-vis ASR in that sense. In the business combination agreement, we have provided some reps and warranties around that, but the main thrust of it is that all the policyholder rights and their and the liabilities we have for them, moves to the new owner.
Good. Any other question in the room? Yes, sir.
Hi, my name is Robert, private investor. A question around the annual report-.
Robert?
Robert, yeah.
Uh.
Annual report. Quite a big report, 450 pages, up 50 pages from last year.
It's full disclosure.
Why is it so big? Can there be anything done to make it more concise?
Well, we wish.
Is it also a reflection of the internal complexity?
We discuss this in the supervisory board all the time, believe me. Matt, you wanna answer that one?
I wish that wouldn't be the case. We have to produce and read and analyze all those 450 pages, and that is a giant task. However, it is likely, with the introduction of IFRS 9 and 17, in 2023, that I'm sorry to say, the disclosure will get even more robust, shall we say. We look forward to... At least we're only printing 150 copies of the thing now. You can get it online, but it is likely to actually increase in size, given the complexity of the disclosure.
Okay. Do you have a follow-up question or?
I have a follow-up question for Lard Friese. You took over work from another CEO who left something behind for you. Are you satisfied with the results of the settlements which have been made over the last two years, in regards of that the company is able to get a better reputation here? That's my question.
All right.
There are still a lot of people I know who have not a good resolution. It continues. As I said, I think I have not received a real good answer from Matt, because, as I say.
repeat here on page 216.
No, no, we got the question.
Yeah, there's nothing said about the Netherlands here, about the settlements in the annual report.
Okay.
That is not finished, I believe.
Okay. In the Netherlands, we've had a number of issues that we've addressed over time in different ways. We were able to mitigate a lot and to resolve a lot, which I'm very pleased with. There's still, by the way, not done by me necessarily, because it's been a long period, as you know. I think we can be pleased with that. At the same time, we still have difference of agreement with a number of people and a number of our clients, unfortunately. Unfortunately, in some of these cases, they are still being discussed in court.
I cannot go into these individual cases, as you would expect, I'm happy and pleased to see that we've been able, over the years, to mitigate a lot of these complaints and to be able to bring them to a proper resolution. Unfortunately, we still have disagreements with some of our clients, and in some cases, these are being litigated, and that has to go through the court process and will lead to an outcome that we need to await. If I look at the overall reputation of Aegon in general, we operate in multiple markets, so, and we also do not use the Aegon brand in every market. In the U.S., we are called Transamerica, for instance.
I would say that, our reputation, has increased over the years, and, I think, you know, the way we run the company, the way we ensure we bring our purpose to life, and if we do that continuously, for a long period of time, it will have no doubt, a positive effect on the overall reputation of the firm.
Okay. Any other question in the room? I'm looking... I'm sorry, did you have another question?
No.
That comes later. That comes later. Don't worry, you'll have your chance. I'm looking at the moderator. Anything else? Good. Okay, thank you. We now move to agenda item 2.2. The Chair of the Remuneration Committee, Ben Noteboom, will present the 2022 remuneration report. Ben, please proceed.
Good afternoon, everybody. Thank you, Bill. Ladies and gentlemen, before we ask you to cast your advisory vote on the 2022 Remuneration Report, I would like to share a summary of what was disclosed in the 2022 report and answer your questions. The remuneration policy that applied to the Supervisory Board members in 2022 was approved by our shareholders, you, in 2020. There were no deviations from this policy in 2022. As announced last year, the Supervisory Board has decided, in line with our policy, to index the base fee, attendance fees, and travel fees with 5% as of 2022. These fees are not indexed automatically, and this was the first update since 2019.
The increase of these fees, as well as an increase in the number of meetings and travel movements, resulted in a higher total remuneration level compared to last year. Similar to the Supervisory Board, the remuneration policy that applied to the Executive Board members in 2022 was approved by the shareholders in 2020. There were no deviations from this policy in 2022. For the 2022 performance year, Lard Friese was allocated EUR 1,559,000 in fixed compensation and EUR 3.6 million in total compensation. Matt Rider was allocated EUR 988,000 in fixed and EUR 2.3 million in total compensation. In accordance with the Executive Board remuneration policy, the fixed compensation levels of Mr. Friese and Mr.
Rider have been increased by 5% as of January 2023. These increases will keep both aligned with internal and external compensation levels, economic developments like inflation and changes to the compensation of other senior managers in the Netherlands. The variable compensation of our executive board members for 2022 was based on a mix of business and individual performance results. Aegon's overall business performance result was 113% on a performance scale, with 100% as target and 150% as max. This result was driven by strong results on several indicators, as were already shared by Lard, such as free cash flows, addressable expense savings, and the execution of the transformation program.
Converted to the performance scale that applied to our executive board members, the Aegon business performance result of 113% resulted in a score of 85% for the executive board. You can see this on the first line of the table. This result has 70% weight in the calculation of their total variable compensation. The other 30% was based on individual performance results. As you can see in the other lines in the table, this was measured by performance indicators related to the development of the strategic roadmap, the execution of capital initiatives in line with the strategic roadmap, sustainability, integration, and execution, the proportion of women in senior management positions, and for Matt, finance strategy execution. Based on a total result of 88%, Lard Friese was allocated EUR 1,368,000 in variable compensation.
Matt Rider, based on a total result of 85%, was allocated EUR 837,000 in variable compensation. A third of these amounts has been paid in cash, while two-thirds will be paid in Aegon shares after a deferral period of three years. That concludes my summary of the remuneration. Back to you, Bill.
Thank you, Ben. We will now address the questions regarding agenda item 2.2. Any questions in the room? I'm looking at the moderator. Any questions from the chat? No? Okay.
Thank you.
Thank you. Thank, just on this point, please note that agenda item 2.2, about the remuneration report 2022, is subject to an advisory vote. Ladies and gentlemen, prior to this meeting, our shareholders have been able to cast their votes either by granting a proxy or using the e-voting system. The option to vote live during the meeting is enabled. Let me briefly explain how you can vote via the app. The voting app displays the options: for, against, and withheld. After having voted, the display will show your vote. If you want to change your vote, you can do so until the voting is closed. For our shareholders in the room, if you have questions about the voting app, please raise your hand and someone will assist you.
The voting results will be shown at the end of the meeting, before the last agenda item, any other business. We now move to agenda item 2.3. Matt Rider will give an explanation of Aegon's dividend policy. Matt, the floor is yours.
Thank you, Bill. We've decided to transition to a cash-only dividend as from the 2022 final dividend, and have therefore updated our dividend policy accordingly. This decision was made for several reasons. First, it removes the need to buy back shares to neutralize the dilutive effect of the stock dividend. Second, it provides more room to execute the planned share buyback in relation to the ASR transaction, and to ensure that these capital distributions to shareholders are done in a tax-efficient manner. The remainder of the dividend policy and our approach to returning capital to shareholders remain unchanged. We are committed to paying a sustainable dividend to shareholders, which can grow over time if Aegon's performance so allows.
That is evidenced by the increase in our dividends from EUR 0.17 per common share over the financial year of 2021, to the EUR 0.23 per common share over the financial year 2022, we are proposing today. We are targeting a dividend of around EUR 0.30 per common share over 2023, barring unforeseen circumstances and subject to shareholder approval at next year's annual general meeting. Back to you, Bill.
Thank you, Matt. We will now address questions regarding agenda item 2.3. Are there any questions in the room? I would like to ask the moderator, any questions? Good, we can continue. We now move to agenda item 2.4, the adoption of the annual accounts 2022. We already discussed the financials of 2022 and the related questions. I therefore now would like to ask Rogier van Adrichem, our independent auditor from PwC, to make a few comments. Please note that Aegon has released PwC from the obligation to observe confidentiality, to allow them to comment on the audit of and the auditor's report on the financial statements of Aegon N.V. Roger, the floor is yours. You'll get the food afterwards.
Thank you, Mr. Chairman. Good afternoon, dear shareholders. I'm happy to provide you with some insights into our 2022 audit of Aegon's financial statements. I would like to use this opportunity today to provide you with the comfort that we have performed a robust and independent audit. Just to give you an idea, we spent roughly 200,000 audit hours reviewing the quarters and auditing Aegon's consolidated financial statements. 2022 was a challenging year in which the increase of interest rates and the inflation impacted Aegon's equity, income statement, and collateral position. A year in which Aegon signed a business combination agreement with a.s.r. to combine the business of Aegon Nederland and a.s.r., and the last year of IFRS 4, turning into IFRS 17 from the 1st of January 2023 onwards.
Both two events, deal with a.s.r. as well as IFRS 17, are disclosed in the financial statements and described in our key audit matters. Before I explain our key audit matters and our conclusions around the internal controls and audit matters, let me first start with the outcome of our audit. We issued an unqualified audit opinion on the consolidated financial statements dated March 15, and that means that these financial statements give a true and fair view of the financial position of Aegon as at 31 December 2022. It also means that the integrated annual report of Aegon contains all information required by law. Let me go to the key audit matters. A key audit matter is the matter which is most important, which we have identified in our work during the year.
These matters often include critical accounting estimates and management judgment. I will highlight the following four key audit matters. The first of all is the impact of the agreement between Aegon and a.s.r., already mentioned earlier in this meeting. Given the impact of the agreement on the disclosures of rights and obligations, but also on the classification as held for sale and the significance of the impairment at EUR 1.8 billion, we determined this as a key audit matter. Management has determined that in quarter four 2022, Aegon is committed to a sale involving the future loss of the control of Aegon Netherlands, and that qualifies for held for sale. Based on our own assessment, we concur that the disposal of Aegon Netherlands met the criteria for held for sale classification in quarter four 2022.
We tested management calculations of the impairment loss, we found the calculation of the impairment loss, as well as the disclosures, to be appropriate. The second key audit matter I would like to highlight is the valuation of certain assets and liabilities arising from insurance contracts. The assets and liabilities arising from insurance contracts are the deferred policy acquisition cost, the value of business acquired, VOBA, the insurance contracts liability, that's the EUR 190 billion, and then the benefit derivatives in insurance contracts. The valuation of these items involves the use of valuation models that use judgmental inputs and assumptions. Think of assumptions around mortality, mobility, future expenses, surrender, lapse, utilization rates, and own credit spread. In note 34, you can find the sensitivities of these inputs on equity and net income.
We involved our actuarial and valuation specialists to test models, process, the inputs, and the assumptions. We concluded that the valuations are within a range we consider acceptable based on our own industry experience. Well-balanced was our point in the range. The third key audit matter I would like to highlight is the valuation of certain Level 3 investments. Just for clarity purposes, a Level 3 investment is an investment without observable independent references. In the investments for general account of EUR 131 billion, roughly EUR 2.9 billion of investments are categorized as Level 3. That's primarily debt securities and investments in Dutch real estate. We developed our independent valuation for these Level 3 investments. We considered that the Aegon valuation of these investments was within the bandwidth that we consider acceptable, actually, on the prudent side of the bandwidth.
The last key audit matter, and that's around the disclosure of the estimated impact of IFRS 17 and IFRS 9. As I said, from the 1st of January 2023, both IFRS 17 and IFRS 9 has become actually effective for the annual reporting. As the adoption of both standards have a significant impact on IFRS equity, Aegon provided in note 2.1 their best estimate of the impact. Please note that Aegon stated that the impact on the opening balance sheet is indicative and can be subject to change. Based on all the procedures we have performed, as we have outlined in our key audit matter, we found the estimated impact on group reported equity to be reasonable and that the disclosure note was appropriate.
Let me go further, and tell you a little bit about the internal controls around financial reporting, the work we did. Management explains in their integrated annual report, the design of their internal control system, and confirms in their in control statement that the financial reporting does not contain any material inaccuracies. We have audited Aegon's internal controls over financial reporting as of 31 December 2022. In our opinion, Aegon maintained, in all material respects, effective internal controls over financial reporting as of that date. We did not notice any material weaknesses in Aegon's control environment around financial reporting. Let me touch on the climate risk and the way we have approached it in our audit assessment.
Aegon worked with Ortec Finance to conduct an extensive and systematic climate risk assessment for its general and separate account assets across all business units. The modeling results continued to indicate that Aegon's general account portfolio remains resilient against key systemic climate risk drivers across all modeled climate scenarios over a 40-years horizon. This is the asset side. We considered the impact on the 2022 financial statements resulting from the risk of climate change on the insurance activities limited. Due to, among others, the relative limited size and nature of the property and casualty portfolio of Aegon. It's primarily life insurance business. As the investment portfolio is largely valued at market value, the risk of climate change on this portfolio does also not lead to a material risk from a financial statement perspective....
The last topic I would like to address. That's about our approach towards fraud risk and going concern. On the request of stakeholders, we summarized in our report our old approach towards the risk of fraud and the applied going concern assumption. We identified as potential fraud risk, the risk of management override of controls. Based on our audit work done, as we have described in detail in our report, we did not notice any indications of fraud potentially resulting in material misstatements. Management prepared the consolidated financial statements on the assumption that the group is a going concern. That it will continue its operations for the foreseeable future. We reviewed management going concern assessment, where it included all relevant information. We evaluated the adequacy of the solvency position and free cash flows. We evaluated the stress testing of liquidity and capital requirements.
Our pursuit procedures performed did not result in outcomes contradicting management's assumptions and judgments. With that, I would like to thank you very much for your attention, and I'm, of course, happy to take any questions relating to our audit of the financial statements. Before that, I will now give the floor back to the chairman.
Thank you, Roger. Questions with respect to the annual accounts 2022 and 2022 have already been addressed. Let me check if there are any additional questions. I know there's certainly one here. Please proceed.
My name is Kina. On behalf of VEB, it's very difficult for outsiders to judge, to interpret the numbers that a company like Aegon is presenting. It's not you to blame. It's a very complicated business. Therefore, we have to rely on the competence of the management teams and all the thousands of people working within Aegon. We have to rely on the competence of the supervisory board, especially the audit committee, and certainly in last instance, certainly we have to rely on the competence of the external auditor. I'm sure that also the management team and the supervisory board rely also. This, of course, we all try to make sure that the data which are presented to us are indeed realistic and no major mistakes are happening. Now, we've established the importance of your role.
I'll come back to some questions I'm having. First, to how much we can rely on the risk management, because insurance is about risk management, how strong your risk management structures are, and afterwards, how strong PwC is in order to judge how strong these risk management approaches are. Are we really sure that we can rely on the data? First thing, I recently read that there are some issues, that have been some issues for a longer period with De Nederlandsche Bank, according to Knab. Knab is not very relevant or important number-wise, how is it possible that for a longer period, these kind of structural risk management issues have been occurring in one company and lots and lots of business units you're having, lots and lots of daughter companies that you have.
How can we be sure that not similar issues appear in more relevant business units or more relevant companies, daughter companies that Aegon is having? If there are risk management issues in some of the larger parts of Aegon, that will have an impact on the numbers. How can we rely that the risk management is indeed up to speed in every single part of Aegon? The first question, and I'm really interested how PwC sees this and whether they've detected the issues themselves and have been warning you, "Listen, you have to do something. Also, De Nederlandsche Bank is following you." Second thing, that has to do with China. A couple of weeks ago, I read in the Financial Times that the PCAOB, for those who don't know, it is something like a worldwide organization of accountants.
All the big accountants companies are member of or listen to. It's a very knowledgeable organization who tend to communicate in a very diplomatic way, and they said literally the following: "The Chinese arms of KPMG and PwC, those audits in China carry unacceptable number of flaws." In normal words, it's a crappy check of the books in China. I was wondering, what have you done, what has PwC done, to make sure that the numbers you're getting, you're consolidating from your joint venture in China, a very important part, as we just discussed today as well, that we can rely on those numbers. Have you asked help from Deloitte, for instance? Did you go yourself into China? Were you allowed to get access to all the data? So on and so on.
I was wondering how you're going to mitigate the kind of fundamental flaws that your representative in China appears to be having in doing the audits. Those are my two.
Okay.
very fundamental questions.
Just to make sure I have got it right, between the questions that you're asking are the ones that are directed to Aegon's management and which ones are addressed to the auditor?
Both questions are at least manage directed towards the auditor. The first question is related to both you and the auditor.
Okay, should we allow him to respond to the auditor points, and then we can then deal with risk management?
Of course.
Okay. Roger, you want to deal with this?
Sure, sure. Absolutely. Well, thank you for your question. Let me take first the question about regulation on... You mentioned the example of Knab. Indeed, Knab, from a group perspective, is not material at all. However, as you know, we as auditors do need to apply what we call the ISA 250 requirements. The ISA 250 requirements means that we need to make sure that we have a good understanding of the regulation relevant for the organization and that that regulation is adopted. You need to split it into two things. One is the regulation, which have a direct impact in the financial statements, being IFRS, tax law. That, of course, will be audit, and you can see our opinion on those kind of elements in the audit opinion. The second element is the element around indirect regulation.
Indirect regulation is regulation around anti-money laundering, in the case of Knab we talk about credit risk management. That's more indirect, has not a direct impact to the financial statement. For that, of course, we take a good look. We have discussions with management. We make sure that we understand that management will do everything possible to adhere to those regulations. It's not audited, but it is what we look into. Do you know the rules? Do you adhere it? Is there a good process in place? Is there reporting? That's included in our audits, and that's also included in the audit for all the components relevant to the group audit. That is the way we audit indirect regulation.
Do you agree with me that those indirect things, in the end, will, and very often do, have an impact directly with some delay? If your internal control mechanisms are not right, because you do not make sure that you invoice your customers in time, or you collect the invoices in time, that at some point you have to take the hit, and you do feel the pain, maybe one or two years later. Those indirect things are not for luxury. In the end, they will often have a financial impact with some delay. Do you agree with that, or do I misunderstand that?
I agree that you need to adhere to law and regulation because that will have potentially an impact later on, and then you end up in the provisioning cycle, which was just one of the other questions. If you talk about controls around revenue recognition, the ones you just mentioned, that's not indirect, that's direct.
Okay, direct.
I just mentioned to you that we audit the internal controls around the financial reporting, which includes revenue recognition, and that we issue an unqualified opinion on the internal controls.
The as far as the more indirect elements, which I feel at some point may have an impact, at least with some delay. If you see that in some daughter companies or some business units, there are some potential issues in there, should we be afraid as shareholders that those things may appear also in the larger, more relevant business units? Are you sure about that we don't need to worry about them?
Is-
I don't care about Knab at all, actually.
I just want to make sure your question is that because.
Can we trust that the relevant business units, that the direct, but especially also the indirect controls, regulations, and so on, that the organization is well-managed, and the risk management is under control? That's my key question.
Okay. Well, the auditors can provide a view, and we will respond.
Of course.
in terms of the management. Go ahead, RJ.
For me, the answer to your question is: we do not audit the indirect regulations. We evaluate, we discuss it. There's no audit opinion on it. If you ask me to give you comfort, audit comfort, I can't give you.
Okay. That's clear.
It is not the scope of an audit for the financial statements.
Okay. maybe in terms of responding to your question, management?
Yeah. Yeah.
Thank you very much for your question, Mr. Keiner. First of all, the situation around Knab, obviously not comfortable. We were not happy with it, let me give you a bit of facts around that. In December of 2019, DNB issued concerns around the controls and risk management for a particular credit book that had to do with credits that were originated through lending platforms in a number of markets. What we have done is 2 things. One, since 2019, the team has worked on remedying those risks and those controls. We have not increased the book. We have started to divest the book.
The book came from a end of year 2019, EUR 1.5 billion number to today, EUR 250 million, which is less than 2% of the balance sheet of the bank. None of that book has been loss-making and has been sold at a loss, so there have been no financial ramifications of it. Let's say, obviously, the concerns we've tried to remedy in the company, the concerns that DNB had, they were also, to a certain extent, around, for instance, the ability to have controls around the documentation on those loans that were generated at the time that they were generated.
That has led to quite some discussion, which we have disclosed in our annual reports from Knab over the years, recently that came out, that is some news flow that you're referring to. Was that good? No, that was not good. Have we tried to amend it? Yes, we've amended it now. Has it led to financial implications? No, because the books were good, the loans were good. We have divested them over time, by the way. That's on Knab itself. Your general question about risk management frameworks and can risks happen?
We have an elaborate, risk management practice throughout our company, where we look at many risk types: financial risk management, compliance risk, operational risk, and a raft of risk management types that we are looking at. It is being led, by the way, by our CRO, Dr. Astrid Jäkel. The practice is a intense practice in which our regular reports, regular audits, regular second line and third line views that are being done on a regular scheduled basis, and they are being reported out to the board of the company, but also overseen by the risk management sorry, by the risk committee.
... committee of the Supervisory Board, in quite some detail. Next to that, there's of course, the internal audit of the control environment that we have, which is done through our internal audit practice that we have, and of course, in close consultation with our external auditor. We believe that we have a very mature and very extensive risk management practice that we continuously evaluate and rigorously control with the right checks and balances. We have, on the back of that, many discussions, which are regular, by the way, and normal with all our local supervisors, to make sure that also they are, you know, properly informed about our risk management practice. That's how it works.
Okay. Then there was a specific point regarding-.
Yeah.
-China?
Correct. Well, I can easily answer that question. First of all, China, the business in China, the joint venture business in China, is not part of, let's say, the scope of the full group. It's in that sense, that minor that we don't need to focus that specifically on it. The main items, U.S., U.K., the Netherlands, will bring in at least more than 90% of coverage. Having said that, those are joint ventures, and the joint ventures are audited by EY and KPMG in China.
I'm sorry, if that is the answer, I'm not feeling more comfortable right now, on the contrary. I would hope that especially a country like China, and especially because it is a joint venture, and especially because there's some. It is difficult to do audits there, and that we can rely on those, and especially since this is a growth area for Aegon, that would be a very big reason for me to be very close to the matter and making sure that, you know, this is an opportunity for Aegon, but also a potential liability. This doesn't make me feel very comfortable, to be honest.
Matt, you want to respond to that?
I can.
I mean, you gave a response. I mean.
It's not a big issue.
Okay, right here.
As I said, I mean, if you look at the business size of China, it's rather limited. We talk about here the consolidated financial statements and the impact on the consolidated financial statement of the two joint ventures, and that is very limited. Secondly, it doesn't mean that we don't do any work. We instruct, in this case, the asset management business in Hong Kong. We review the file, we have discussions with the auditors, et cetera, et cetera. We take the responsibility of the work which is performed there, based on the oversight we do, the review of the work they do, the reporting they do to us. That is covered in the oversight we take as the group auditors. It's not that it is a very sizable business.
Yeah, but let me warn you, indeed, there are lots of companies. Let me take another company. Let's take Philips. Philips got a business unit, less than 10% of its yearly revenue. The issues with this 10% has ensured that the share price dropped by 70%. The previous CEO said, "Well, most of the business is doing very well. Don't worry about it." Well, we do worry. This could answer the company if you're not careful. The same thing here, you may sell maybe for, I don't know, for EUR 500 million life insurance policies, but in the end, if colleagues of this mister arrive after five years, say, "A liability. You sold something which is not true.
We want to be compensated because you cheated upon us." In the end, you may end up with a bigger liability than the business has ever been. The fact that so far it's just a few percentage points of your total business is not good enough reason for me to say, "Well, for the time being, we don't worry about China." I'm not relaxed at all.
I don't think that's what he's saying either, but Matt?
Maybe, yes, maybe I can add to this, because this is not just an audit issue. Yes, it's small enough so that it is outside the scope of the group audit, and indeed, you have KPMG and EY do the audit of that joint venture. Coming back to risk management, that's where we are involved. We are very close to China, so we have done asset credit quality, deep dives there, product reviews. That's all part of the group, let's say, oversight of that business. Just because it's small, we do recognize that, you know, if they start doing strange things, then it could be very impactful for us. That's why we do tend to have quite a strong risk management oversight of the joint ventures. Yeah.
I think this important point, because this is why I was trying to clarify who you're asking your question to. There's the role that the auditor plays in terms of what is their scope, and there is what is the role that management has in terms of the overall risk framework and management. The fact that it is, that you've pointed out that China, and in terms of the scope, does not mean that it's not important or relevant. Let me finish, please.
No.
The fact that the supervisor, and this is a key point from the supervisory board's perspective, both on the audit and the risk committee, is the oversight over the joint ventures, not only China, but all the ones that we have around the world, for exactly the points you raised. We have someone else who's waiting.
Yeah, I think this is important enough. I've started the questions, recognizing the important role of the management, the extremely important role of you as a Supervisory Board, and the last role of the auditor. Now, what you're saying, "Don't worry, the auditor is not really that much focused on China." You still have us.
I didn't.
It's so complex. Well, that's at least.
No, I'm sorry, but please don't. If I may say, I, with all due respect, don't put words in my mouth. What I'm not saying is that. I'm trying to differentiate what questions you're asking the auditor, what questions you're asking us as management bodies. He's given a response that's not to be interpreted, that it is not of top importance and relevance. It's two separate things, all right?
I recognize that.
That the point is, that the concern that you have are shared and focused by the management bodies, both the Supervisory Board and the management.
There's one thing where we disagree. I agree that the management board is looking into it, which you do. I agree that you're looking into it as supervisory board. I disagree that this seems to have, for the time being, a lower priority for the auditor. There, where we disagree.
Okay.
Please, one thing to add from my end, if you don't mind. I understand where you're coming from. Two things, though. I want to underscore that what our auditor is just saying is that the KPMG and EY are auditing firms that are on that, so he works with them, for instance, as well. These are joint ventures. We don't control them 100%, so they have also their own auditing firms auditing the numbers. Of course, of course, you should, I think you said that already.
Yeah.
You're talking with and working with them. That's one thing. Secondly, indeed, like, the joint ventures in Brazil and China are of course, getting a huge amount of attention on all risk types from management. We have also, you know, teams overseeing those joint ventures, being part of the boards of the joint ventures, and taking active participation in many, many risk areas that we know are there, and as a result, we're on top of it.
Okay. Maybe just the last point. These entities are being audited by reputable firms. What he's saying is that it's just not this auditor, but they are being audited and monitored from a third party, from a third line of defense as well. Okay. Sorry, next question.
Yeah, thank you. I've almost forgotten what I wanted to ask, that could maybe actually a good thing for Aegon. Actually, I know it. I have a question for the auditor. I understand that every word in the annual report has been audited either by PwC or by EY. Correct?
No. The financial statements are audited by us. The report of the Board of Directors, Supervisory Board, is we have read that and made sure that that is aligned with the financial statements. It's not audited.
you have not audited then the text then, technically?
From the board of directors?
No.
The audit is related to the financial statements.
Yes, Who has then audited the text then?
I mean, if you mean the text-
The text.
being the text.
Yeah.
the report-
The words.
of the board of directors?
Yes.
What we do is we read that, the text, we understand it, we make sure that if there are items incorrect, based on the work we have done as an author, we make it correct, but we don't audit. No.
If my question.
Yeah.
from this document here. On June 4, 2021, Aegon and Leaseproces B.V. announced that it has finalized its agreement to settle these claims in September 2021. The parties announced that more than 90% of the customers had agreed to a settlement by which the last remaining threshold was met. Do you think it's realistic, as an auditor, that you can find, in a very short time, 90%, that 90% agrees to a settlement? Do you think, as an auditor, that if you read that, if that is realistic?
Well, I think it's whether it's factually-
Answer with a yes or a no.
It's whether it's factually correct or not.
I mean.
If you go back to professioning. What is the professional level needed? What we do as the auditors, first of all, we look, is there a, is it possible to estimate any potential liability? Secondly, how much is the chance that you need to pay out those cash? That's what we audit, and that's based on if that's happened, then, of course, the provision needs to be taken. If there is a broader, remoter risk, you will find it as a disclosure note in the financial statements, and that is audited by us.
You are the financial auditor, I understand also, you not the text, so you have seen the numbers, so you could then say a yes or a no, that you believe that 90% of these claims have been handled.
Yeah. Based on the knowledge, we have understand, a good understanding, yeah. Based on the knowledge we gained from the audit, we have looked to those texts, and we have said, "Okay, well, this, based on our knowledge, is not materially incorrect.
You have seen the financials then, to pay it out?
The financials has been audited.
Okay.
Yeah.
Okay, thank you.
Okay.
One thing, the 90% was the acceptance level. Just, the second thing is, you're quoting 2021, I think, yeah?
It's You guys copy it every time. This year it's the same text as last year.
It happened in 2021. Yeah.
Yeah, 2021, 2022. I expect this also, that this will be coming back in 2024, 2023, then, report.
Hard to judge.
2021, this was the 90% acceptance rate.
Yeah.
of the settlement was done.
What I'm saying is, this text will come back next year.
Hopefully, it will not come back in the Aegon text.
Okay.
In the-
Well, next time I will ask the same, again, the same questions.
Okay. Any other question in the room? Any other question, looking at the moderator from the chat? Good. Thank you. Thank you, Roger. We now move to agenda item 2.5, the approval of the final dividend 2022. This is a voting item. As indicated in the annual report 2022, we propose a final 2022 dividend of EUR 0.12 cents per common share and EUR 0.003 cents per Common Share B, in line with the group's dividend policy, which we address under agenda point 2.3 of this meeting and can be found on the corporate website.
If approved, in combination with the interim dividend paid over the final half of 2022, Aegon's total dividend over 2022 will amount to EUR 0.23 per common share and EUR 0.00575 per Common Share B. We will now address the questions regarding agenda item 2.5. Are there any questions regarding 2.5? Looking at the moderator. Good. Thank you. We now move to agenda item 3, the release from liability. We will start with agenda item 3.1. We propose that the Executive Board members be released from liability for their duties to the extent the exercise of such duties is reflected in the end report 2022, or has otherwise been disclosed to shareholders prior to the adoption of the annual accounts 2022.
You now have the opportunity to ask questions about agenda item 3.1. Any questions? Thank you. We will now move to agenda item 3.2. We propose that the supervisory board members be released from liability for their duties to the extent the exercise of such duties is reflected in the annual report 2022, or has otherwise been disclosed to shareholders prior to the adoption of the annual accounts 2022. We will now address the questions from our shareholders with respect to agenda item 3.2. Good, thank you. Let me remind you that agenda items 3.1 and 3.2, the release from liability, are voting items. We now move to agenda item 4.1, the proposal to appoint Ernst & Young Accountants as independent auditors for the annual accounts of 2024 through 2028.
This recommendation is the result of a rigorous tender process that Aegon concluded in line with industry best practice and consistent with its sound corporate governance principles. For further details, I refer to annex 2 of the agenda for this meeting. Are there any questions? Thank you. We will now move on to agenda item 5, the composition of the supervisory board. We propose to reappoint Donna Young as member of the supervisory board for a term of 2 years, so until the end of the AGM to be held in 2025. We propose to reappoint Donna Young for a fourth term, consisting of 2 years because of the construction and active way in which she contributes as a member of the board and as chair of the risk committee.
Her risk committee experience has been considered as a strength, allowing her to include a strong risk-based perspective on many key topics. Furthermore, her extensive knowledge of the organization, her substantial board experience and expertise in the insurance and asset management industry provide great value and continuity to the supervisory board. For more information regarding Ms. Young's availability in the agenda, is available in annex 3. We will now address any questions you may have regarding this point. Yes, sir?
Alexander van der Graaf, particuliere belegger.
I'm a retail investor. Yes, the Supervisory Board and Ms. Dona Young. Two years ago, I was quite critical about this. Ms. Young, once again, might be reappointed. I don't really consider this to be very innovative. I would even say it's inappropriate. Next year, will we be faced with the same sham situation with Ms. Wortmann-Kool? The official term of these people has expired. An additional extension is undesirable. What I would like to say to the Supervisory Board is innovate. It's not that the Supervisory Board has not been able to find a better candidate. They simply never try to find this, and they simply opt for the person they know well, and it's convenient.
This agenda item is always discussed prior to the meeting with the major shareholders, that settles the fact, it's time that the shareholders protest against this, because this is not in the interest of the shareholders. Quite the contrary, just look at the past. Ms. Young, since 2013, is a member of the Supervisory Board, and so is the member of the Supervisory Board that has been in the board for the longest period of time, more than 10 years. Nothing came of creating shareholder value in that period of time. I've said before that the Supervisory Board, for years, has been far too passive. Ms. Young is the old boys network, and she should have been replaced a long time ago. What has she added? What has she contributed over the past decade?
One of the duties of the supervisory board is making sure that the board of management creates shareholders value, something that is not working out. Years ago, for years, the supervisory board members have been looking at this and do, without doing anything. Ms. Young was part and parcel of that. As shareholders, we don't want this old boys network situation in a supervisory board. We don't want people who just nod and go along and try to hold on to their positions for as long as possible in order to be able to pocket their money for as long as possible. We don't want old boys networks in the supervisory board. We want innovation. We need new blood. We need critical persons, critical people that are a value to us.
Given the past, I have very little faith in the supervisory board of Aegon. I think it would be far better if these members of the supervisory board, who have been in the board for such a long time, be replaced by people who are active and critical. I think it's really bad that Ms. Young is yet again being nominated for yet another mandate. Why is this happening? This is not in the interest of Aegon.
Just 2 points here. First of all, under Dutch corporate governance, you can have 3 terms of 4 years. The third term is goes down for 2 plus 2, and therefore, we are fully compliant with Dutch corporate governance. Just to be very clear here, the starting point. Point 2, one of the points that has been addressed and raised, certainly by the CEO in his discussion, is the huge progress made in terms of the whole risk management, to de-risk the company, to make it a much more predictable company in terms of result. Dona Young has had a key role to play in this, and has a role in terms of Chair of the Risk Committee. She has deep knowledge and understanding of this business.
She also has expertise in terms of other insurance companies, which gives us from her previous experience, it is extremely valuable. Third point, it is not she who is requesting to stay. It is I who am asking her to stay, because I value her contribution, her expertise, her constructiveness, and the very positive way that she can provide good, sound advice to management, which is valued by the management, as well as her colleagues in the supervisory board. My last point is, if you look in terms of the last five years, there have been many new board members coming in. The composition has changed. There has been new members coming in, new blood, new challenges, which is continued part of the process. Yes?
My name is Kina. I speak on behalf of VB. I only partially share the previous comments. What I do not share or do not know, how good or how bad, Ms. Young has been performing, I do not know, and also support, indeed, your last comment. Aegon seems to have got the corner, indeed, that you're getting more focus in the organization. Step by step, more value is being created, and hopefully, results will be shown in a few years. It will take several years before results are can be demonstrated to us. I'm more lenient in that respect. I'm less lenient on your interpretation as far as corporate governance is concerned. The corporate governance code these days is very clear. Standard is 2 times 4 years, and that's it.
In exceptional situations, where there have been very good special reasons, you can extend twice for two years. We had this discussion last year with Mrs. Vormankool, exceptional circumstances. I'm afraid that next year we'll have again, exceptional circumstances. Not everything is exceptional.
Uh.
I think in the meantime, you've got a new management board. I think a new strategy is being developed step by step, is being implemented as well. I think there's no compelling reason for existing supervisory board members to stay beyond the eight years. I don't think there are compelling reasons. We disagree on that. That's very obvious. Could it be that you've been trying to find candidates, but no candidates were yet available or willing to perform this role? Have you searched at all, or were you already determined from the beginning, "No, we want to continue until the end?
To answer your question, first, two comments. First of all, the company is going through huge change. The a.s.r. transaction, if you look at the number of meetings that we had from the Supervisory Board's perspective, has been an enormous amount of meetings, additional meetings, to make sure and to work with management and supervise management in terms of that process, and that will continue. The company is going through major change, I think it's fair to say. Exceptional circumstances, this isn't steady state, everything, nothing changes year by year in the case of Aegon. The second point is, as Chair of the Nomination Committee, I am constantly on the lookout for quality talent to join the Supervisory Board. It's one of my top missions to do that. I'm always there.
It's not that I wake up and say, "Oh, today I have to do something new." It is part of my regular process, constantly engaging. What I'm looking for is a board that is complementary with different skill sets that allow us to perform our function.
We don't disagree on that at all.
And, and, and so therefore-
Someone who's really advocating all the time, the importance of your role. It has been VB, it has been myself as well. I think very often there were supervisory board members, maybe at different companies, who are underappreciating the relevance of their own role. You don't need to educate me on your importance.
my point.
Having said that, it's not that you decided yesterday you have to change things. This is a process that has been started even with the previous CEO, which means you've had a number of years to find appropriate candidates who could have been complementary. It's not as of today that you're saying, "Oh, we need to find somebody, but we're still in a turmoil." You've had plenty of time to find very good candidates.
We do.
So-
We do.
Why extending the term of somebody who's been in this role for another, for 10 years? I just don't understand it.
Because-
It seems to me that you've been reacting instead of anticipating that something needs to be done.
I'll be very clear. I, starting with my role, I highly value her judgment and contribution. It is I, and I stress, and I take full account, it is I who've asked her to continue. Okay?
William L. Connelly.
Mr. Connelly, well, that is the easiest way, the easiest path, and it's hardly very innovative.
Okay, duly noted. Any other questions, comments on this point? Good. Thank you. We'll continue. We now move on to agenda item 6. We will now address the cancellation, authorization to issue, and authorization to acquire shares. Let me begin to briefly cover all 4 proposals of item 6 before taking your questions. The first proposal regards the cancellation of common shares and Common Shares B, repurchased by the company in connection with your share buyback programs. A description of this proposal can be found on page 4 of the agenda of this meeting. Secondly, we propose that you authorize the executive board to issue common shares with or without preemption rights, which is described on page 5 of the agenda. This resolution is similar to, and will replace, the authorization granted to the board in 2022.
Thirdly, it is proposed that the shareholders authorize the executive board to issue common shares in connection with a rights issue. The proposal is described on page five of the agenda. These authorizations are limited to 25% of the issued capital and may only be used to safeguard or conserve the capital position of the company. The rights issues will be conducted in line with market practice, offering eligible existing shareholders the right to subscribe for the new shares in proportion to their shareholding to prevent dilution. Upon adoption, this resolution will replace the similar authorization granted in 2022. Finally, we propose that the shareholders authorize the executive board to acquire shares in the company. This proposal is described on page six of the agenda. Upon adoption, this resolution will replace the authorization granted at the 2022 AGM.
While Dutch law allows a repurchase of shares to a maximum of 50% of the company's capital, it is proposed to limit this authorization to 30%. This percentage is higher than the one granted in previous years to facilitate the intended EUR 1.5 billion capital return to shareholders that is anticipated to be executed after closing of the transaction with a.s.r., barring unforeseen circumstances. Aegon intends to cancel the shares that will be acquired as part of this capital return. We will now address the questions for the agenda item 6.1, 6.2, 6.3, and 6.4. Are there any questions? Good, thank you. Ladies and gentlemen, item 6 was the last voting item on the agenda. Within a few moments, we will close the live voting.
Please submit your votes now, if you have not already done so.
Yeah, close.
The voting is now closed. Within a few moments, we will show the voting results for the agenda items. Lieke, could you please read out the voting results for each agenda item?
Will do. With respect to agenda item 2.2, the advisory vote on the remuneration report, 96.99% has voted in favor of the resolution, 3.01% against. Agenda item 2.4, the adoption of the annual accounts, 99.94% has voted in favor of the resolution, 0.06% against. Agenda item 2.5, the adoption of the final dividend, 99.53% has voted in favor of the resolution, 0.47% against. We continue with agenda item 3.1, the release from liability for the executive board, 98.72% has voted in favor of the resolution, 1.28% against.
Agenda item 3.2, release from liability for the members of the Supervisory Board, 98.71% has voted in favor of the resolution, 1.29% against. Agenda item 4.1, the appointment of Ernst & Young, 99.89% in favor of the resolution, 0.11% against. Agenda item 5.1, the reappointment of Dona Young, 99.04% has voted in favor of the resolution, 0.96% against. Agenda item 6.1, the cancellation of common shares, 99.9% has voted in favor of the resolution, 0.10% against. Agenda item 6.2, the authorization to issue common shares, 97.15% in favor, 2.85% against.
Agenda item 6.3, the authorization to issue shares in connection with the rights issue, 98.36% in favor of the resolution, 1.46% against, and final, 1.64%, thank you, Bill, then against. Finally, agenda item 6.4, the authorization to acquire shares in the company, 85.54% in favor of the resolution, 14.46% against. Thank you, Bill.
Thank you, Bieke. Thank you, Bieke. I now establish that the meeting has voted in favor of the Remuneration Report 2022, discussed Aegon's dividend policy, adopted the annual accounts 2022, and approved the final dividend over 2022. Furthermore, I establish that the meeting has released the members of the Executive Board and Supervisory Board for their duties performed during 2022. I establish that the meeting has appointed Ernst & Young Accountants as independent auditors for the annual accounts of 2024-2028. Also, I establish that the meeting has reappointed Dona Young as member of the Supervisory Board.
Lastly, I establish that the meeting resolved to cancel common shares and Common Shares B, and that the meeting authorized the executive board to issue common shares with or without preemption rights, to issue shares in connection with the rights issue, and to acquire shares in the company. We now move on to agenda item 7, any other business. Before we come to the conclusion of the meeting, I would like to ask the questions: Are there any further questions? We do have one. We do have one from Mr. I'm sorry, that just before you go there, Mr. Schandenbroek. I'll paraphrase it, or would you like to raise it yourself, sir? He asked before.
Yeah,
My question relates to what the executive board does to supervise the distribution of the investment pension at Aegon, which has for years been delivering a mediocre to poor performance. Last year, it was very bad, which victimizes many pension recipients. What are you doing to intervene? Are you aware of this poor performance?
Yeah, Jan van den Broek. Thank you very much for your question. I am aware of your concern as we discussed it prior to the meeting, and I find it very unfortunate. Now, in general, about what we are doing to make sure that our products are appropriately developed and launched, et cetera, is a couple of things. We have, to start with, a process called PARP. It is, the acronym is the Product Approval and Review Process, which is a very elaborate process, where each product, before its launch, needs to go through in order to assess the product's qualities, whether it addresses a need in the market, whether the product is constructed in the right way, whether it adheres to all the rules and regulations, et cetera, et cetera.
There are, and this is one process. We have our risk management processes, and we have the general business, performance management processes around that as well. In our company, we have around product and around the commercial activities of the company, an elaborate system in place to ensure that what we launch in the marketplace is not only well-controlled, but also valuable for customers and let's say, risk managed as well.
Now, where it pertains to the particular category of product that you are referring to, the out here, Beleggingspensioen product, I do realize that this is a product that you are continuing to maintain the pot of money that's being invested, while you're taking part of that as your pension every month in the course of the years. Last year, 2022, was a bad investment year, and especially for... Depending, of course, on where the money is being invested in, but if it was, for instance, in a lot of fixed income investments, given the sharp rise in rates, the performance is not very good. Because there is market risk, and that market risk is reflected in the investment of that portfolio.
Now, I can't go into your specific case or that, unfortunately, I don't have all the details. But we are-
The overall supervision of these people that do the investments, it's just bad. Also this year, it's again bad.
Uh, the-
It's far below markets.
I can only First of all, I'm sorry that you're disappointed, right? 2022 did not come out with good investment results. However, the market was also quite bad in that respect, as we discussed the questions on the asset management business in general, I've also put that in the context of ourselves, our own experience. When it comes to overseeing the product development process and making sure that things have been done in an appropriate manner, we continuously evaluate it because there is a Product Approval and Review Process, so you review it regularly as well. What I can do here is make sure that we pay appropriate attention to this particular area, which I know our team is doing at this moment.
When it comes to your particular case, I suggest that we discuss that with the persons relevant in your particular case. In general, we do take action to see what's happening here, and if we can do more and better and beyond what we have done, because the market reality is also there, and I think that's another area that we need to accept, unfortunately.
I appreciate that you look, into it.
Sure.
There are thousands of people, it's not only me.
Yeah, yeah.
It's also a potential risk for the company, I think.
Okay, understood.
Thank you very much.
Thank you. Yes?
Yeah, Kener, on behalf of VBDO. On page seven, you indicated, you write, that selling the Dutch business to a.s.r. concludes the first part of your transition, your transformation as the new Aegon. I was wondering, what are pages two and three?
It's even a chapter, Mr. Kener. In the first chapter, we said we've... Now, the first chapter is a chapter of a book, and then the question, of course, underlying this is: How big is that book? Well, it's not Le Petit Prince, which is a relatively short book. It is more Lord of the Rings, I would say. I expect many chapters to come to transform the company in a manner that we sustainably build a strong business in the chosen markets with high-quality cash flows. And if we do that well and over time, then, I hope to be at a, at one moment here where Mr. de Graaf is saying, "I now see it happening," which is really what I, what I hope we can do.
The next chapter is something that we will explain in more detail at our Capital Markets Day event, for which you're all kindly invited. We are working very hard at the moment to make sure that we are prepared for that event. You're all invited there. You need to take a ticket to go to London, but you can also follow the webcast, by the way, on that day, and I kindly invite you to do so, at which we will disclose the next leg of our journey.
Let me then put it in a different way. I do not expect any of the next chapters, whether it will be 10 or 3 chapters, I do not expect any of the next chapters to include doing a similar transaction on what you did with the Netherlands. For instance, doing it, the same thing with the UK, selling it or making it a strategic asset, nor do I expect that Aegon will suddenly start appearing in India or any other country, saying, "Now we start a business there." It will be different kind of transformations. Is that a correct assumption, or do we really have to wait until your Capital Markets Day?
I'm more than happy to discuss this further in London at our Capital Markets Day. One final point, we are already in India.
Okay, it's a major market. Oh, it's a major-
No, I,
Major.
I'm joking. It's the end of a long meeting, but I'm joking a little bit. No, we hold your... It's a very good question. I understand where it's coming from. We aim to build over the longer term...
Mm-hmm.
In a number of markets that we have chosen, strong and advantaged businesses that are growing profitably and provide, therefore, the outlook for growing free cash flows, and as a result, growing returns.
Thank you.
Thank you very much.
Yes, sir.
Yes, I have the following question: Today, you started with a very nice slogan, Lars, when you started your PowerPoint presentation, that it was something like, "Let's make life better for the people," right?
Helping people live their best lives.
Yeah, correct.
Yeah.
Nice that you correct me, because I have to learn that slogan. If that is what we want to do.
Mm-hmm.
Maybe we want to also restore things, is Aegon also having a plan out of their own initiative to restore investments which went wrong with people who trusted their investment with Aegon? Because there are examples in the industry, there are banks that went out of their own initiative, they came up with solutions. What we see, for example, particularly in the Netherlands, in the United States, it's different because there you have the SEC, which is a pretty good watchdog. In the Netherlands, we have a mild watchdog.
Can you maybe do something for the Dutch investors who have been impacted by products which were, in the end, as the other colleagues here say, performing bad or were actually total different products which they signed up for. I think as Aegon, you should have the mindset to, in your own initiative, without that the people go into courts and have to fight for a solution, I think Aegon should come up out of own initiative, come with solutions. I think that would be also good for your brand.
You want me to respond, please?
Yeah, let's wrap it up.
Thank you for your suggestion, it's also something that we have done in many, many cases. I'm trying to find the number in my head, but if I look at the entire period of the years that we've been discussing, concerns that customers had with products that they have sold in the past with us, we have really taken those complaints very seriously.
Over the years, we've done a lot of work to engage with customers to try and find solutions for the issues that they had. In many cases, we were able to find those solutions, that's good. Unfortunately, we could not find solutions in all cases, in some cases, we simply disagree with our clients on the assessments that they make. Unfortunately, Mr.
Keith, people then go to court, and then it goes through the legal system, and that takes a long time before that brings a resolution. I would argue, we are doing a lot every day to, first of all, have a great product, great service, and then in those cases where customers have been disappointed with the product that they bought from us, we listen to their concerns, we try to remediate it, and for years, we've done a lot of work to do so. Unfortunately, in some cases, we disagree, and then in some cases, that goes to court. That is where we are. In most of the cases, we've been able to find the right resolutions.
I'm just talking about cases that are from 20 years ago. I believe maybe the products now have improved, but I think you should also find solutions for old-time customers still.
Well.
That's-
Well, we have. I mean, for instance, on the unit-linked file, we've invested more than EUR 1 billion, for instance, over the years, to make sure that we address the complaints of our customers. We have been successful in many, many cases to do that. Some cases, we disagree, and I don't have to repeat what I said earlier.
Okay.
Thank you for your, for your, suggestions.
Okay. Thank you very much.
Good. Any other final question? Good. Thank you. This almost concludes Aegon's annual general meeting of shareholders. Before I close this meeting, I would like to congratulate Ernst & Young Accountants, with their appointment. On behalf of the other members of the supervisory board, I would like to congratulate Dona Young with her reappointment to the supervisory board. Congratulations, Dona. I also would just like to add, for those who asked questions, that Dona Young received an award as one of the best-performing directors in the United States by the Financial Times, so we're fortunate to have someone like Dona Young on our board. We look forward to continuing working with you. Since this meeting concludes Ben's last term as member of Aegon Supervisory Board, I would like to thank him for his valuable contribution over the past 8 years.
Ben, also on behalf of the other Supervisory Board members, I would like to thank you for letting us use your extensive knowledge and insight. We will miss your collegiality and humor, and your challenging, constructive challenging that we have on a regular basis from Ben. We wish you all the best in the future. Ladies and gentlemen, this concludes Aegon's 2022 Annual General Meeting of Shareholders. Before I close this meeting, I have a couple of announcements to make. Some drinks will be served outside this room in the hall, where we look forward to engaging with you in further conversations. If you have used a voting device from us, please make sure you return the device at the exit of this room. This also applies to the headsets, if you have used one.
On behalf of the executive board and the supervisory board, I would like to thank you very much for your continued support and your active participation prior and during this meeting. I look forward to seeing you again next year. I now close this meeting. Thank you.
Thank you.