Aegon N.V. AEG recently announced that the third tranche of its EUR300-million share repurchase program, approved in March, will commence from Oct 3, 2022 and likely close on or before Dec 15 of this year.
In the above-mentioned time frame, Aegon will buy back common shares worth EUR133 million to neutralize the dilutive impact of the 2022 interim dividend paid out in shares.
The repurchased shares will be held as treasury shares and utilized for paying out future stock dividends via shares. This decision follows the consent of AEG’s shareholders, majority (60%) of whom voted in favor of receiving the final dividend in the form of shares.
On the same day of announcing the duration of the third tranche of the authorized buyback plan, AEG also notified the completion of the second tranche of the same buyback program. The second tranche, spanning from Jul 7 to Sep 27, included repurchase of common shares worth of EUR107 million.
Aegon boasts an impressive history of returning shareholder value via share buybacks. Even the COVID--induced market volatilities — having forced most insurers to temporarily halt their share buyback activities — could not prevent AEG from conducting frequent share repurchases.
Continued share buybacks underpin the strong financial position of Aegon and its longstanding commitment to rewarding its shareholders with substantial capital. Apart from share buybacks, AEG resorts to annual dividend hikes. The insurer has been a regular dividend-paying company since 2013. The latest raise in the final dividend was proposed during AEG’s fourth-quarter 2021 result announcement.
A solid balance sheet and sound growth in free cash flows are expected to have aided Aegon in implementing accelerated and prudent capital-deployment measures. While announcing second-quarter 2022 results, management projected a cumulative free cash flow of minimum EUR2.2 billion over the 2021-2023 period, higher than the EUR1.4-1.6 billion target fixed on the 2020 Capital Markets Day. Increased availability of free cash flows will motivate the insurer to allocate more capital in the days ahead.
Similar to Aegon, other insurers like Marsh & McLennan Companies, Inc. MMC, Lincoln National Corporation LNC and RenaissanceRe Holdings Ltd. RNR embraced tactical capital-management moves in the first half fo 2022.
Marsh & McLennan bought back 7 million shares worth $1.1 billion. MMC had around $5.2 billion left to be authorized for share buybacks as of Jun 30, 2022. In July 2022, MMC’s board of directors approved a 10% hike in its quarterly dividend.
Lincoln National returned $657 million to its shareholders via $500 million of share buybacks and common dividends worth $157 million. As of Jun 30, 2022, LNC had $764 million remaining under its authorized share repurchase program. In November 2021, LNC’s board of directors approved a 7% hike in its quarterly dividend.
RenaissanceRe bought back shares worth $137.5 million and paid out common dividends worth $32.4 million in the first half of 2022. RNR had $475.2 million left to be authorized for share buybacks as of Jun 30, 2022. In February 2022, RNR’s board of directors approved a 2.8% hike in the quarterly dividend.
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