Aegon Ltd. · EURONEXT:AGN
Aegon — Q3 2016 Earnings Presentation
30 slides from Aegon's earnings presentation, Nov 10, 2016
Slide 1: Q3 2016 Results
Q3 2016 Results Alex Wynaendts Darryl Button The Hague – November 10, 2016 CEO CFO Helping people achieve a lifetime of financial security
Slide 2: Net income of EUR 358 million
Overview 2 Net income of EUR 358 million Limited impact from assumption changes and model updates • Realized expense savings and favorable equity markets were more than offset by the effects of adverse US mortality experience and lower interest rates • Stable Solvency II ratio well within target ran
Slide 3: Underlying earnings before tax
Earnings 3 Underlying earnings before tax Expense savings offset by adverse claims and effect of low rates • Expense savings program yielding results • Volatility in mortality claims in US, partly offset by positive morbidity experience • Low interest rates led to lower reinvestment yields impacting
Slide 4: Expense savings ahead of 2016 target
Earnings 4 Expense savings ahead of 2016 target Main driver is strong delivery in Americas • Implemented annual run-rate expense savings of EUR 87 million in 2016 • Ahead of schedule to achieve EUR 200 million cost savings target by 2018 • Headcount reductions of over 750 positions in 2016 main driv
Slide 5: Adverse mortality in the US
Earnings 5 Adverse mortality in the US Impacted by frequency and severity of large claims • Adverse net mortality mainly driven by severity of claims of over USD 5 million • Claims experience this quarter was close to a two standard deviations event, which equates to an expected claims volatility of
Slide 6: Solid net income
Earnings 6 Solid net income Assumption changes offset by fair value gains Underlying earnings to net income development in Q3 2016 (EUR million) UEBT Q3 16 461 Gain on fair value items Americas: Netherlands: Fair value items 84 • Credit spread tightening & • Real estate revaluations (+) investment r
Slide 7: Assumption changes and model updates
Earnings & capital 7 Assumption changes and model updates Leading to limited impact across reporting frameworks Other charges Group Solvency II Capital generation EUR (81) million Immaterial impact Immaterial impact • IFRS impact driven by EUR (100) million assumption changes and model updates for l
Slide 8: Solvency II ratio of 156%
Capital 8 Solvency II ratio of 156% Ratio remains well within target zone despite adverse market impacts Group SII ratio ~158% +2% +1% (2%) (2%) (1%) ~156% Target zone OF OF 17.8 ~160% ~155% 17.2 SCR SCR 11.3 11.0 Year end Q1 Q2 Capital Management Market 2016 interim Other Q3 2015 2016 2016 generati
Slide 9: Holding excess capital at EUR 1.1 billion
Capital 9 Holding excess capital at EUR 1.1 billion Dividends from the units offset capital return and holding expenses • Dividends received from the Americas and Aegon Asset Management • Remittances were more than offset by dividend, and funding & operating expenses • Tax benefit at the holding off
Slide 10: Continued solid gross deposits
Sales 10 Continued solid gross deposits Life sales reflects focus on profitability and shift to fee-business • Higher gross deposits driven by US retirement plans and asset management - Net outflows amounted to EUR 2.3 billion driven by EUR 3.5 billion of outflows from acquired Mercer block • New li
Slide 11: Clear transformation
Strategy 11 Clear transformation Successful shift from spread- to fee-based businesses Development of fee-based balances and earnings (balances in EUR billion and earnings as % of total earnings) • Strong growth in fee-based earnings; 750 60% percentage nearly tripled to 44% since 2010 600 45% • Org
Slide 12: Progress on financial targets
Strategy 12 Progress on financial targets Capital return, excess capital and expense savings on track Year-end Year to date Commitment 2018 target 2016 results Strong sales growth CAGR of 10% >10% Reduce operating expenses EUR 200 million EUR 87 million Increase RoE 10% 7.2% Excess capital at Holdin
Slide 13: Appendix
13 Appendix For questions please contact Investor Relations +31 70 344 8305 ir@aegon.com P.O. Box 85 2501 CB The Hague The Netherlands
Slide 14: Analyst & Investor conference
Calendar 14 Analyst & Investor conference Hosted in New York on Thursday December 8, 2016 To register please contact Investor Relations +31 70 344 8305 ir@aegon.com
Slide 15: Index
Appendix 15 Index Click subject to go directly to the section Q3 2016 Strategy Q3 2016 Q3 2016 Capital and support Financials Asset portfolio Assumptions Slide 16-18 Slide 19-23 Slide 24 Slide 25-28
Slide 16: Aegon at a glance
Strategy support 16 Aegon at a glance Focus History Employees Life insurance, pensions & Our roots date back to the Over 29,000 employees asset management for first half of the 19th century (September 30, 2016) 30 million customers 33% 8% Europe AAM Asia <1% Earnings Investments Paid out 59% America
Slide 17: Responsible business
Strategy support 17 Responsible business Embedded in our operations Our commitment: “To act responsibly and to create positive impact for all our stakeholders” Putting our customers at Having a responsible Empowering our Promoting retirement the center of what we do investments approach employees re
Slide 18: Raising awareness
Strategy support 18 Raising awareness Retirement research highlights Research publication Published the 5th Aegon Retirement Readiness survey covering 16,000 people in 15 countries Global presence Launched new longevity institute in Brazil collaborating with the Aegon Center for Longevity and Retire
Slide 19: Underlying earnings
Financials 19 Underlying earnings Amounted to EUR 461 million Underlying earnings before tax • Lower earnings in Americas as a result of adverse Americas Europe mortality experience and lower reinvestment yields, (USD million) (EUR million) partly offset by favorable morbidity, lower expenses and fa
Slide 20: Gross deposits
Financials 20 Gross deposits Increased to EUR 24.7 billion Gross deposits • Gross deposits in the Americas up 20% driven by Americas Europe Retirement Plans resulting from the Mercer acquisition, (USD billion) (EUR billion) partially offset by lower deposits in Variable Annuities • Higher gross depo
Slide 21: New life sales of EUR 219 million
Financials 21 New life sales of EUR 219 million As a result of strict pricing policy • New life sales in the Americas decreased, driven by all product categories • New life sales in Europe were down mainly as a result of adverse currency movements • New life sales in Asia declined, as higher sales i
Slide 22: MCVNB of EUR 70 million
Financials 22 MCVNB of EUR 70 million Impacted by low interest rates and lower VA sales • Lower MCVNB in the Americas as a higher contribution from life insurance was more than offset by a lower contribution from Variable Annuities • MCVNB in Europe down as a higher contribution from mortgages in NL
Slide 23: Operating expenses
Financials 23 Operating expenses Decreased to EUR 900 million Operating expenses • Operating expenses in the Americas down 8%, as the Americas Europe benefit of cost savings programs and lower variable (USD million) (EUR million) expenses were partly offset by the Mercer acquisition • Operating expe
Slide 24: General account investments
Asset portfolio 24 General account investments By geography September 30, 2016 amounts in EUR millions, except for the impairment data Americas Europe Asia Holding & other Total Cash/Treasuries/Agencies 20,272 18,319 293 82 38,967 Investment grade corporates 41,913 5,787 3,514 - 51,213 High yield (a
Slide 25: Solvency II sensitivities
Capital and assumptions 25 Solvency II sensitivities As of Q2 2016 Solvency II sensitivities • Group Solvency II ratio well within target zone of (in percentage points) capital management policy Scenario Group US NL UK • Immaterial sensitivity to equity markets Capital markets • UK annuity portfolio
Slide 26: Capital generation and excess capital
Capital and assumptions 26 Capital generation and excess capital Actual capital generation lower due to adverse market impacts • Capital generation excluding market impacts and one-time items of EUR 0.3 billion • Holding excess capital stable at EUR 1.1 billion as net dividends received from the uni
Slide 27: Capital allocated to run-off businesses
Capital and assumptions 27 Capital allocated to run-off businesses Further reduced in 2016 • Ambition to reduce capital allocated to run-off businesses by USD 1 billion by 2018 from 2015 level • Current capital allocated to run-off businesses of USD 1.4 billion • Capital intensive run-off businesses
Slide 28: Main economic assumptions
Capital and assumptions 28 Main economic assumptions Overall assumptions US NL UK Exchange rate against euro 1.10 n.a. 0.71 Annual gross equity market return (price appreciation + dividends) 8% 7% 7% Main assumptions for financial targets US NL UK 10-year government bond yields Develop in line with
Slide 29: Investing in Aegon
29 Investing in Aegon Aegon’s ordinary shares • Aegon ordinary shares Ticker symbol AGN NA - Traded on Euronext Amsterdam since 1969 ISIN NL0000303709 and quoted in euros SEDOL 5927375NL Trading Platform Euronext Amsterdam Country Netherlands • Aegon New York Registry Shares (NYRS) - Traded on NYSE
Slide 30: Disclaimer
30 Disclaimer Cautionary note regarding non-IFRS measures This document includes the following non-IFRS financial measures: underlying earnings before tax, income tax, income before tax, market consistent value of new business and return on equity. These non-IFRS measures are calculated by consolida