Aegon Ltd. · EURONEXT:AGN
Aegon — Analyst & Investor Conference, New York City, December 2010
30 slides from Aegon's conference presentation, Dec 7, 2010
Slide 1: Execution of strategy
Execution of strategy Alex Wynaendts CEO Analyst & Investor Conference New York City, December 2010
Slide 2: Key messages
Key messages � Significant transformation of business � Ambition to be a leader in chosen markets by 2015 � Improve growth and return profile � Repayment of Dutch State remains priority 2
Slide 3: AEGON transformed significantly
AEGON transformed significantly Less geared to financial markets General account equity exposure NL excess capital interest rate sensitivity (EUR billion) (EUR billion) 10 6 � 2% interest rate decrease � 2% interest rate increase 8 4 6 2 4 - 2 (2) 0 (4) 2005 2006 2007 2008 2009 3Q10 2005 2006 2007 2
Slide 4: AEGON's ambition
AEGON’s ambition “To be a leader in all of our chosen markets by 2015” � Reallocate capital � Increase returns � Optimize ONE AEGON … resulting in sustainable profitable growth 4
Slide 5: Continued focus on execution of strategy
Continued focus on execution of strategy Reallocate capital � Run-off institutional spread-based business in the US on track � Increased fee business, reduced spread business in the US � Exploring strategic options for Transamerica Re, including sale � Improved risk profile, increased equity hedging
Slide 6: Reallocate capital
Reallocate capital
Slide 7: Ambition to improve growth profile
Ambition to improve growth profile Rebalance capital across geographies 10% 30-35% 40-45% * 29% 2010 2015 61% 25-30% � North America (USA, Canada) � Western Europe (The Netherlands, United Kingdom) � New Markets (Spain, Central & Eastern Europe, Asia, Latin America, AEGON Asset Management, VA Europe
Slide 8: Building on leading market positions
Building on leading market positions Americas Europe Asia USA # 3 Term life UK # 2 Group pensions NL # 3 Group pensions CHN # 8 of foreign-owned life # 4 Universal life # 2 Individual pensions # 5 Individual life insurers in China # 10 Variable annuities # 7 Annuities # 5 Accident & health # 13 Pens
Slide 9: Exploring strategic options for life reinsurance
Exploring strategic options for life reinsurance � Leading position among life reinsurers: #3 in US and #7 globally � Limited long-term strategic fit with core businesses � Exploring strategic options, including a sale � Aim to maximize value Dublin Dublin Paris Paris Seoul Seoul Madrid Tokyo Charlo
Slide 10: Increase returns
Increase returns
Slide 11: Continued focus on increasing returns
Continued focus on increasing returns Return on Equity (RoE) 10% 5% 0% 2008 2009 YTD 2010 � Strategic focus supports increase in RoE – Grow the business – Shift to fee-based from spread-based business – Reduce expenses in established markets – Reallocate capital to areas with strong growth prospects
Slide 12: Significant cost reductions in mature markets
Significant cost reductions in mature markets � Keep expenses flat in US while growing revenues – Consolidating offices; significant headcount reduction – Growing chosen market segments � Provide better service at lower costs in the Netherlands – 20% cost reduction by 2013 in core business, partly o
Slide 13: Restructuring in the UK on track
Restructuring in the UK on track Targets � 25% cost reduction by end 2011 � Increase RoC to 8-10% by 2014 � New business RoC of >12% � Cumulative operating cash flows of GBP 600-650 million from 2010 to 2014 Execution � Restructuring of sales division � Closure of employee benefits software business
Slide 14: Deliver operational excellence
Deliver operational excellence � Continue to be cost efficient operator – Total operating expenses decreased 2%* while growing the business – Headcount reduction of 4%** – Implementation of Lean Six Sigma – Leveraging back office functions in the US � Effective and efficient distribution – Completed
Slide 15: Enhance customer loyalty
Enhance customer loyalty � Improve insight in customer needs – to be central in innovation – Many new products launched � Launched eServices delivery model at Transamerica Retirement Services � New proposition to underfunded pension funds in the Netherlands � Expanded offering of investment funds ac
Slide 16: Empowering employees
Empowering employees � New management teams in place � Install global talent management – Global Leadership Team – AEGON University 2.0 – Management development � Roll-out strategy engagement plan – Developing consistent company wide employee satisfaction surveys 16
Slide 17: Capital
Capital
Slide 18: Repayment of Dutch State remains priority
Repayment of Dutch State remains priority Repayment Dutch State (EUR billion) ■ Repaid 1.5 1.5 3.0 ■ To be repaid before June 30, 2011 � Final repayment of EUR 1.5 billion – Total repayment of EUR 2.25 billion, including premium of EUR 750 million – IRR of 17% on final repayment � Final repayment by
Slide 19: Continued strong capital position
Continued strong capital position � Excess capital in holding expected to increase in Q4 due to dividends from units � Core capital* at 74% of total capital base – managing to at least 75% by end 2012 � Normalized free cash flows of EUR 1.0 - 1.2 billion per annum Total capital base 100% 90% 80% 75%
Slide 20: Impact low interest rates manageable
Impact low interest rates manageable � Low interest-rate environment poses longer-term challenges to industry � Active management to protect in-force book from decline in interest rates � Continued low interest rates will put pressure on new business margins � Effect of prolonged low interest rates
Slide 21: Optimize ONE AEGON
Optimize ONE AEGON
Slide 22: Further executing strategy to optimize ONE AEGON
Further executing strategy to optimize ONE AEGON � New global functions established – Brand & Customer Strategy, Human Resources, Sustainability � Local execution of strategic priorities within global framework � Standardizing best practices across the group – Customer loyalty programs, operational
Slide 23: Expanding our franchise in Asia
Expanding our franchise in Asia � Combining all businesses in Asia under common leadership � Focused on selling life and savings products � Businesses will be integrated during 2011 � Multi distribution strategy with clear profitability criteria � Focus on organic growth Hong Kong S. Korea REGIONAL
Slide 24: Conclusion
Conclusion � AEGON transformed significantly over recent years – Shifting focus from spread to fee-based products – New management teams appointed – Improving risk profile � Ambition to improve growth and return profile – Reallocate capital – Continued focus on return on equity � Repayment of Dutch
Slide 25: Appendix
Appendix
Slide 26: Execution of strategy since June 2008
Execution of strategy since June 2008 Reallocate capital � Sharpened focus on core activities of life insurance, pensions and asset management � Increase fee business, reduce spread-based businesses � Running off institutional spread-based business � Running off BOLI/COLI business � De-emphasizing s
Slide 27: Execution of strategy since June 2008
Execution of strategy since June 2008 Increase returns � Restructuring UK business to achieve targeted cost reductions of 25% by end 2011 � Various restructuring programs in US, NL and Canada � Significant senior management changes � Continued focus on cost reductions, while investing in the busines
Slide 28: Execution of strategy since June 2008
Execution of strategy since June 2008 Optimize ONE AEGON � AEGON Asset Management operational � Broadened role of Management Board � Introduction of variable annuities in the UK, the Netherlands, France and Japan � Combining all businesses in Asia under common leadership � New global functions (Huma
Slide 29: For questions please contact Investor Relations
For questions please contact Investor Relations T: +31 70 344 8305 E: ir@aegon.com www.aegon.com P.O. Box 85 2501 CB The Hague The Netherlands
Slide 30: 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
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