Aegon Ltd. · EURONEXT:AGN
Aegon — Q3 2008 Earnings Presentation
18 slides from Aegon's earnings presentation, Nov 6, 2008
Slide 1: Third quarter 2008 results
Local knowledge. Global power. Third quarter 2008 results Jos Streppel, CFO Media conference call November 6, 2008
Slide 2: Third quarter overview
Third quarter overview 1. Strengthening capital buffer - prudent in current market environment 2. Core businesses performed well given extremely difficult market conditions 3. Earnings impacted by continued turmoil in world financial markets 4. Well-positioned to withstand crisis and benefit from ev
Slide 3: Capital position
Capital position o EUR 3 billion additional core capital from Dutch State o Excess capital of EUR 312 million above AA requirements o EUR 5 billion in surplus capital above EU regulatory requirements – Solvency I ratio: 160% o Q3 capital ratio = 71.5% of shareholders’ equity Local knowledge. Global
Slide 4: Capital position - What happens in Q4?
Capital position - What happens in Q4? Substantial buffer to protect against further market deterioration + Underlying earnings - Market movements + De-risking EUR 600 – 800 million + Capital releases + EUR 3 billion core capital from Dutch State via Vereniging AEGON Local knowledge. Global power. 4
Slide 5: Underlying earnings
Underlying earnings o Lower fees in US and UK due to lower financial markets o Reserve strengthening old-book variable annuities guarantees in US o Higher mortality charges in US life reinsurance o Provisioning in NL for unit linked policies and charge on specific group pension contracts Underlying
Slide 6: Financial markets and impairments affected net income
Financial markets and impairments affected net income o Underperformance of fair value items o Impairment charges – Lehman Brothers, Washington Mutual (EUR 336 million) – US housing related asset-backed securities (EUR 46 million) Underlying earnings to net income development (EUR million) 500 (384)
Slide 7: New life sales
New life sales o Total new life sales down 18% at constant currency - Economic downturn impacted sales of high net worth and middle market products - Solid annuity and group pension sales in the UK, offset by individual pensions - Sales growth across most lines of businesses Retail life sales New li
Slide 8: Strong growth in net retail deposits
Strong growth in net retail deposits o Total net deposits of EUR 1.7 billion - Fixed annuities sales: best quarter since 2003 - Variable annuities deposits in Americas relatively flat - Strong increase in deposits in Other countries driven by retail mutual funds and variable annuity sales in Asia Va
Slide 9: Q3: an extraordinary quarter
Q3: an extraordinary quarter o The Q3 environment - Acceleration of Debt Crisis - Failures of major financial institutions - Deleveraging of the financial sector - Darkening economic outlook - Credit spreads widening and declining non-government bond prices - Increasingly aggressive global policy re
Slide 10: Limited direct equity exposure
Limited direct equity exposure Total investments General account Shares EUR 351 billion EUR 132 billion EUR 3.3 billion Off balance sheet Loans 18% Indexed 28% universal life Other 21% 8% Other Real estate 39% 2% General Shares account 2% 37% Private Bonds equity& Equities Policyholder 70% hedge fun
Slide 11: AEGON has actively managed its credit risk – mainly US
AEGON has actively managed its credit risk – mainly US o In 2003 and 2004: tightening in credit spreads o In response, AEGON began to structure investment portfolio more defensively o As a result, AEGON now has a more conservative portfolio than during previous downturn in 2001 /2002 o Economic down
Slide 12: Asset allocation is typical for the US life industry
Asset allocation is typical for the US life industry Total invested assets of EUR 83.3 billion* Asset allocation of USD 119.2 billion – September 30, 2008 45.1% 46.0% � AEGON � Industry 18.3% 14.9% 13.6%13.3% 11.4% 6.7% 7.1% 5.6% 5.4% 6.1% 2.0% 1.9% 0.9% 1.7% Cash & Govt Corp. Bonds EM Bonds MBS/ABS
Slide 13: AEGON USA corporate bonds by quality and sector
AEGON USA corporate bonds by quality and sector AEGON USA corporate bond portfolio EUR 38 billion (USD 54 billion)* – September 30, 2008 BIG AAA AA Utility 7.5% 1.8% 10.0% 14.3% Financial 24.8% Sovereign 0.5% BBB A 43.9% 36.8% Industrial 60.4% Ratings are based on a hierarchy of S&P, Moody’s, Fitch,
Slide 14: Unrealized losses - impairments
Unrealized losses - impairments o Lower bond values lead to EUR 2.5 billion decrease in revaluation reserve o Historically no link between these unrealized losses and impairments / realized losses o Impairments Q3: EUR 407 million before tax – in line with preliminary announcement o Ample liquidity
Slide 15: Strategic highlights for the quarter
Strategic highlights for the quarter o Agreement signed to acquire 50% stake of Brazil’s sixth largest independent life insurer o AEGON Emeklilik ve Hayat in Turkey officially launched o Joint venture with Spanish savings bank Caixa Terrassa ranks AEGON 6th life insurer in Spain o AEGON Religare Lif
Slide 16: Key messages
Key messages 1. Core businesses performed well given extremely difficult market conditions 2. Strengthening capital buffer - prudent in current market environment 3. Strong risk and asset management has positioned AEGON to withstand current and future market downturn 4. AEGON well-positioned to bene
Slide 17: Cautionary note regarding forward-looking statements
Cautionary note regarding forward-looking statements Cautionary note regarding forward-looking statements The statements contained in this presentation that are not historical facts are forward-looking statements as defined in the US Private Securities Litigation Reform Act of 1995. The following ar
Slide 18: For questions please contact Group Corporate Communications
For questions please contact Group Corporate Communications +31 70 344 8956 gcc-ir@aegon.com P.O. Box 85 2501 CB The Hague The Netherlands Local knowledge. Global power. 18