Aegon Ltd. · EURONEXT:AGN
Aegon — Analyst & Investor Conference, London 2010
27 slides from Aegon's conference presentation, Jun 22, 2010
Slide 1: Implementing the strategy
Implementing the strategy Alex Wynaendts CEO Analyst & Investor Conference, London – June 22-23, 2010
Slide 2: AEGON's ambition
AEGON’s ambition “To be a leader in all of our chosen markets by 2015” o Reallocate capital o Increase returns o Optimize ONE AEGON … resulting in sustainable profitable growth Local knowledge. Global power. 2
Slide 3: Execution of strategy
Execution of strategy 2008 2H08 - 2009 2010+ Short-term focus Reallocate capital to the Capital Reallocate capital most attractive businesses Costs Contingency Improve growth and returns Increase returns in existing businesses Manage AEGON as an Optimize ONE AEGON international Group Local knowledge
Slide 4: Delivering on strategy
Delivering on strategy 2008 – 2009 Reallocate capital towards o Freed up EUR 5 billion of capital since June 2008 business with higher growth o Running off institutional spread-based business in the US and return prospects o Sold Taiwanese life and Dutch funeral insurance businesses o Entered new ma
Slide 5: Strategy generated strong results
Strategy generated strong results Underlying earnings before tax New life sales (EUR million) (EUR million) 478 488 567 557 415 538 390 484 492 -98 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Revenue-generating investments Gross deposits* (EUR billion) (EUR billion) 388 7.5 7.8 363 6
Slide 6: Impairments are trending down
Impairments are trending down o Impairments are trending down, but remain above AEGON’s long-term average expectations Impairments (EUR million) 416 501 385 394 286 212 150 146 91 64 101 93 69 11 325 355 284 330 193 143 139 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 ■ Americas ■ Rest of the World Loc
Slide 7: Implementing the strategy
Implementing the strategy 2010+ Reallocate capital o Continued review business portfolio – Explore strategic options for life reinsurance unit o Continue to shift focus from spread to fee-based products in US o Rebalance capital across geographies – Invest in CEE, Asia, Spain and Latin America o Imp
Slide 8: Strategic priorities: Reallocate capital
Strategic priorities Reallocate capital Reallocate capital Loca call knowledge. Global power. 8
Slide 9: Portfolio review – exploring strategic options for life reinsurance
Portfolio review – exploring strategic options for life reinsurance o Limited long-term strategic fit of AEGON’s life reinsurance unit, Transamerica Reinsurance, with core business of life insurance, pensions and asset management o Exploring strategic options, including identifying a suitable buyer
Slide 10: Franchise value of Transamerica Reinsurance
Franchise value of Transamerica Reinsurance o Leading position among life reinsurers: #3 in US and #7 globally o Strong in US traditional life reinsurance – 20% new business market share – Top 3 facultative reinsurer o #1 in product consulting & development in US o Recognized internationally for qua
Slide 11: Reallocate capital to higher growth and return businesses
Reallocate capital to higher growth and return businesses Rebalance capital across geographies o Shift focus in US to fee-based from spread-based products 10% 9% – Grow pension business 53% – Run-off institutional spread-based 2009 business EUR 21.7 billion* – De-emphasize fixed annuities 28% o Reba
Slide 12: Strategic priorities: Increase returns
Strategic priorities Reallocate capital Increase returns Loca call knowledge. Global power. 12
Slide 13: Strategic review of UK business
Strategic review of UK business Divest Run-off Restructure � One-off sale proceeds � No more acquisition costs � Focus on growth market segments � Back book run-off � Target 25% cost reduction by end 2011 � Focus on capital light model � Increase RoC from 2.7% in 2009 to 8-10% by 2014 � Explore stra
Slide 14: Leverage leading market positions in the UK
Leverage leading market positions in the UK o Focus on growth market segments where AEGON has a leading position – At Retirement � Growing market with GBP 16 billion of funds maturing annually – Workplace savings � Attractive market with GBP 800 billion of assets � Positive impact from Pension Refor
Slide 15: Continued focus on increasing Group returns
Continued focus on increasing Group returns Return on Equity (RoE) 10% 5% 0% 2008 2009 Q1 2010 o Strategic focus supports increase in RoE – Shift to fee-based from spread-based business – Reallocate capital geographically – Reduce costs o Improve annual cash flows from current normalized* level of E
Slide 16: Adapting operating model to changing environment
Adapting operating model to changing environment Changing environment requires change in industry cost structure Deliver operational excellence o Continue to be cost efficient operator – Enhance web capabilities – Reduce number of administration platforms – Decrease costs per policy o Effective and
Slide 17: Strategic priorities: Capital
Strategic priorities Reallocate capital Capital Loca call knowledge. Global power. 17
Slide 18: Continue to maintain substantial capital buffer
Continue to maintain substantial capital buffer o Excess capital of EUR 3.7 billion – EUR 2.4 billion in operating units – EUR 1.3 billion at the holding company o Core capital* at 74% of total capital base – above threshold of 70%; managing toward higher level of 75% Shareholders’ equity** (EUR mil
Slide 19: Strategic priorities: Optimize ONE AEGON
Strategic priorities Reallocate capital Optimize ONE AEGON Loca call knowledge. Global power. 19
Slide 20: Optimize ONE AEGON
Optimize ONE AEGON o One balance sheet – capture diversification benefits o Leverage and standardize best practices – Product innovation, distribution knowledge and brand management – Underwriting and risk management – IT infrastructure o Consistent performance management Delivering more than the su
Slide 21: Conclusion
Conclusion o Reallocate capital – Explore strategic options for life reinsurance business – Invest in attractive market segments – Improve risk profile o Increase returns – Restructure UK business – Focus Focus on enhancing enhancing return return on equity equity and and cash cash flows flows o Opt
Slide 22: Q&A
Q&A LIFE INSURANCE | PENSIONS — INVESTMENTS
Slide 23: Appendix
Appendix LIFE INSURANCE | PENSIONS — INVESTMENTS
Slide 24: AEGON is well prepared for Solvency II
AEGON is well prepared for Solvency II o AEGON supports the principles of Solvency II o Outcome QIS 5 still uncertain, latest specifications have eased o AEGON has been preparing since 2005 – Internal economic capital model more conservative than QIS 4 – Economic pricing embedded in product pricing
Slide 25: Effective and efficient distribution to support return improvements
Effective and efficient distribution to support return improvements o Multi-distribution strategy with local partners to identify and serve evolving needs of customers o Diversify distribution within each channel o Reduce costs of traditional channels structurally o Invest in direct distribution o S
Slide 26: For questions please contact Investor Relations
For questions please contact Investor Relations T: +31 70 344 8305 E: ir@aegon.com P.O. Box 85 2501 CB The Hague The Netherlands
Slide 27: Disclaimer
Disclaimer Cautionary note regarding non-GAAP measures This presentation includes certain non-GAAP financial measures: underlying earnings before tax and value of new business. The reconciliation of underlying earnings before tax to the most comparable IFRS measure is provided in Note 3 "Segment inf