This section describes the anticipated business combination with Aegon Nederland N.V. Other sections of this Annual Report covers ASR Nederland N.V. and its subsidiaries for reporting year 2022.
On 27 October 2022, ASR Nederland N.V. (a.s.r.) announced that it reached a conditional agreement with Aegon N.V. on a business combination (hereafter “transaction”) with Aegon Nederland N.V. to create a leading insurer in the Netherlands. The transaction covers all insurance activities, including mortgage-origination and servicing operations, the distribution and services entities and the banking business of Aegon Nederland N.V. In practical terms, this means that the pension, mortgage, non-life and income activities, Knab bank, the pension administrator TKP and the service providers Nedasco and Robidus will become part of a.s.r. Two inherently Dutch insurers will thus merge to create a new combination on the Dutch insurance market with leading positions in a number of key markets. This move ties in with a.s.r.’s strategy to strengthen its position in the Dutch market. It will contribute to the further growth and expansion of a.s.r.
The transaction will be concluded once the necessary approvals have been obtained from the regulatory authorities. The closing will take place on 1 July 2023 at the earliest. Until then, a.s.r. and Aegon N.V. will continue to operate on the Dutch insurance market as separate companies. In the meantime, plans will be put in place to prepare for the integration. It is expected that this integration will largely be completed three years after the transaction has been concluded. The a.s.r. building in Utrecht will become the new combination’s headquarters. To a maximum of three years, the Aegon brand will be used for pensions and mortgages, in addition to a.s.r.’s own brands.
The total consideration amounts to € 4.9 billion and comprises: (i) newly issued ordinary shares to Aegon N.V. (29.99% interest in a.s.r. post-transaction); and (ii) a cash consideration of € 2.2 billion. The funding of the cash consideration has been largely secured already through existing surplus capital, the issuance of € 1 billion Solvency II compliant debt instrument (tier 2) and the issuance of new shares for an amount of € 593 million. A fully underwritten bridge facility for the remainder is available.
The organic capital creation (OCC) of the combination is expected to amount to approximately € 1.3 billion by 2025, of which approximately € 600 million from the acquired Aegon businesses, unlevered and including synergies, delivering OCC accretion per share. The dividend step-up will be 12% to € 2.70 per share for 2022, and there will be mid-to-high single digit dividend growth per annum until 2025. a.s.r.’s share buyback programme has been halted. The transaction is expected to deliver a return on invested capital exceeding the hurdle rate of 12% for M&A. a.s.r. expects to maintain a sustainable and robust capital structure post-transaction, while the Solvency II ratio is likely to be around 190% after financing. A strong pro-forma Solvency II balance sheet with ample room for hybrid financing is expected post-closing.
The composition of the a.s.r. Executive Board will remain unchanged post-transaction, with existing responsibilities maintained. As part of the transaction, Jos Baeten’s term will be extended until the Annual General Meeting of 2026 to oversee the integration. He was reappointed during the Extraordinary General Meeting on 17 January 2023. Jos Baeten has been chair of the Executive Board of a.s.r. since 2009.
The a.s.r. Supervisory Board will be expanded upon the successful closing of the transaction. In connection with the transaction, a.s.r. and Aegon N.V. will enter into a relationship agreement providing for, among other things, arrangements with respect to a.s.r.’s governance post-transaction. As part of this, Aegon will be entitled to nominate two additional members to a.s.r.’s Supervisory Board. One member will be female and qualifies as independent. The other member will be the CEO or CFO of Aegon. The two nominees are Mr Lard Friese, CEO of Aegon N.V. and Ms Daniëlle Jansen Heijtmajer. The two nominees to the a.s.r. Supervisory Board were conditionally appointed at the Extraordinary General Meeting of 17 January 2023. The duration of their appointment is linked to Aegon N.V.'s shareholding in a.s.r. The non-independent member has an affirmative vote on certain topics within a.s.r.’s Supervisory Board, in line with the size of Aegon N.V.'s shareholding. Once Aegon N.V.'s shareholding no longer exceeds 20% but remains above 10% of the ordinary shares in the capital of a.s.r., the independent Aegon N.V. nominee will resign and Aegon N.V. will continue to have the right to nominate one member for the a.s.r. Supervisory Board, being the CEO or CFO of Aegon N.V. The right to nominate any a.s.r. Supervisory Board member is terminated once its shareholding in a.s.r. no longer exceeds the 10% threshold. These nomination rights will in any case expire once a period of five years following the closing has passed.