Aegon Ltd. · EURONEXT:AGN
Aegon — Q2 2015 Earnings Presentation
31 slides from Aegon's earnings presentation, Aug 13, 2015
Slide 1: Q2 2015 Results
Q2 2015 Results Increase in earnings, sales and cash flows The Hague – August 13, 2015 Alex Wynaendts Darryl Button CEO CFO
Slide 2: Increase in earnings, sales and cash flows
Increase in earnings, sales and cash flows Increase in underlying earnings; fee-based business growth and stronger US dollar partly offset by lower Life & Protection results in the Americas Sales mainly driven by US retirement plans and asset management Strong operational free cash flows and s
Slide 3: Underlying earnings up as a result of business growth and currencies
Underlying earnings up as a result of business growth and currencies Higher underlying earnings mainly driven by growth in variable annuities, pensions and asset management, in addition to favorable currency movements Earnings impacted by lower fixed annuity and Life & Protection results (includ
Slide 4: Fair value items impacted by hedge programs and guarantees
Fair value items impacted by hedge programs and guarantees Total of EUR (293) million FV hedging without US: (191) US: (54) Loss on macro hedging Lower than expected return on accounting match FV investments alternative investments Holding and other: 118 EUR (73) million Movement in forward swap cur
Slide 5: 18% sales growth to EUR 2.4 billion
18% sales growth to EUR 2.4 billion Gross deposits increased 29% driven by asset management, bank deposits in NL and favorable currency movements New life sales stable as higher IUL sales in the US and favorable currency movements offset lower sales in NL and UK Accident & health and general i
Slide 6: Solid progress on inforce management
Solid progress on inforce management Actions Customer benefits Results Optimizing our portfolio Closed sale of Canadian business Found good home for our customers Enhance return on equity by 40bps Announced sale of Clark Consulting High service levels maintained EUR 0.6 billion aggregate
Slide 7: Sustainable dividend growth
Sustainable dividend growth Proposed increase of interim dividend to EUR 0.12 per share Continue to neutralize stock dividends to avoid dilution Holding excess capital increases to EUR 1.5 billion Future dividend growth dependent on capital position and cash flows Free cash flows Increasing
Slide 8: Update on Solvency II position: tightened range of 140% – 170%
Update on Solvency II position: tightened range of 140% – 170% Greater clarity obtained on various items ► Calibration of US equivalence at 250% RBC including transferability ► Volatility adjuster modelling and higher investment risk capital in the Netherlands ► Fundamental spreads and matching ad
Slide 9: Key messages
Key messages Earnings up due to growth in fee-based businesses and currencies Q2 results High level of profitable sales maintained Capital and risk Capital position and operational free cash flows remain strong management Interim dividend increases to EUR 0.12 Execution of Optimizing our p
Slide 10: Appendix continued Q2 2015 results
Appendix continued Q2 2015 results For questions please contact Investor Relations +31 70 344 8305 ir@aegon.com P.O. Box 85 2501 CB The Hague The Netherlands
Slide 11: Index
Index Press subject to go directly to the slides or continue with presentation 2Q15 2Q15 2Q15 2Q15 Strategy Financials Country Reconciliation support specific tables, assumptions & sensitivities Slide 12-14 Slide 15-22 Slide 23-26 Slide 27-31 11
Slide 12: Aegon at a glance
Aegon at a glance Focus History Employees Life insurance, pensions & Our roots date back to first half of Around 28,000 employees asset management 19th century As per June 30, 2015 Underlying earnings before tax Revenue-generating investments Paid out in claims and benefits 2015 YTD As per June 30,
Slide 13: Sustainability embedded in our strategy
Sustainability embedded in our strategy Products and services A responsible approach Supporting local communities customers can trust to investments Clear and easy to understand Decisions guided by Aegon’s Long history of working with and products Responsible Investment Policy investing in loc
Slide 14: Managing variable annuities for profitability
Managing variable annuities for profitability Both core variable annuities and the closed block managed for profitability Fair value guarantees on core block fully hedged to rates, equities and equity volatility Closed block equity market risk coverage provided by macro hedging Core variable a
Slide 15: Underlying earnings up to EUR 549 million
Underlying earnings up to EUR 549 million Lower earnings in Americas driven by the Underlying earnings before tax recurring effect from assumption changes and model updates implemented Q3 2014, Americas The Netherlands (USD million) (EUR million) adverse mortality claims and divestment of Canada
Slide 16: Net income of EUR 350 million
Net income of EUR 350 million Fair value items loss mainly driven by hedging programs in the US and NL, and lower than expected alternative investment returns, which more than offset gain on interest rate swaps on perpetuals at the Holding Gains on investments amounted to EUR 134 million, primar
Slide 17: Gross deposits increased to EUR 16.8 billion
Gross deposits increased to EUR 16.8 billion Lower gross deposits in the Americas Gross deposits driven by lower variable annuities and less takeover deposits in retirement plans, while Americas The Netherlands (USD billion) (EUR billion) recurring deposits grew by 8% Gross deposits in the Nethe
Slide 18: New life sales were up 1% to EUR 518 million
New life sales were up 1% to EUR 518 million New life sales in the Americas increased, New life sales driven by higher indexed UL sales, which were partly offset by divestment of Canada Americas The Netherlands (USD million) (EUR million) and withdrawal of UL second guarantee product Lower new l
Slide 19: MCVNB of EUR 183 million, despite persistent low interest rates
MCVNB of EUR 183 million, despite persistent low interest rates Lower MCVNB in the Americas mainly due Market consistent value of new business to impact of lower interest rates Americas The Netherlands (USD million) (EUR million) MCVNB in the Netherlands increased, driven by profitable mortgage
Slide 20: Operational free cash flows and holding excess capital
Operational free cash flows and holding excess capital Operational free cash flows* of EUR 388 million ► One-time items of EUR 256 million mostly due to tax benefits arising from re-domestication of variable annuities to the US ► Market impacts of EUR (677) million driven by VA hedging losses in t
Slide 21: Group and local capitalization levels
Group and local capitalization levels Group IGD solvency ratio 206% Excess capital in the United States declined to USD ~1 billion over S&P AA level as a result of capital generation more than offset by dividend payment to the holding IGD ratio in the Netherlands of ~225%; Pillar 1 ratio in th
Slide 22: Capital allocated to run-off businesses
Capital allocated to run-off businesses Current capital allocated to run-off businesses of USD 1.9 billion ► Return on capital of run-off businesses of 2.3% year to date Capital intensive run-off businesses negatively impact return on equity ► Capital allocated to run-off businesses included in
Slide 23: Americas
Americas Lower earnings as growth in VA and Underlying earnings Operating expenses pensions more than offset by adverse before tax (USD million) (USD million) mortality experience and recurring impact of assumption changes and model updates implemented in Q3 2014 454 471 Operating expenses decre
Slide 24: The Netherlands
The Netherlands Higher earnings primarily due to favorable Underlying earnings Operating expenses mortality and an employee benefit release, before tax (EUR million) (EUR million) which more than offset higher non-life claims Increase in operating expenses driven by 136 210 131 131 200 investmen
Slide 25: United Kingdom
United Kingdom Underlying earnings declined to GBP 25 Underlying earnings Operating expenses million due to lower earnings in life business before tax (GBP million) (GBP million) Decrease in operating expenses driven by reduction of business transformation costs and cost reduction programs 26 28
Slide 26: New Markets
New Markets Earnings growth in Asset Management Underlying earnings Operating expenses offset by lower earnings in other markets before tax (EUR million) (EUR million) and divestment Operating expenses up 28% to EUR 209 million due to unfavorable currency 62 62 192 209 51 movements and project r
Slide 27: Main economic assumptions
Main economic assumptions 10-year US Treasury assumed to grade to 4.25% by 2025 3-month US Treasury assumed to grade to 2.5% by 2025 Credit spreads are assumed to grade to 110 bps by 2017 Bond funds are assumed to return 4% until 2025 and 6% thereafter Annual gross equity market returns of
Slide 28: Earnings sensitivities to equity markets and reinvestment yields
Earnings sensitivities to equity markets and reinvestment yields Protection of capital position main purpose of macro Macro hedge equity sensitivity estimates hedging program Total equity return in Fair value items impact quarter IFRS accounting mismatch between hedges and liabilities -8% ~USD (
Slide 29: Investing in Aegon
Investing in Aegon Aegon ordinary shares Aegon’s ordinary shares ► Traded on Euronext Amsterdam since 1969 Ticker symbol AGN NA and quoted in euros Underlying ISIN NL0000303709 SEDOL 5927375NL Aegon New York Registry Shares (NYRS) Trading Platform Euronext Amsterdam ► Traded on NYSE since 1991 a
Slide 30: Upcoming events
Upcoming events September Morgan Stanley conference Bank of America Merrill Dublin Lynch conference September 3, 2015 London September 30, 2015 ING Benelux conference London September 10, 2015 KBW insurance conference London September 16, 2015 Kepler Cheuvreux Autumn conference Paris September 18, 2
Slide 31: Disclaimers
Disclaimers Cautionary note regarding non-IFRS measures This document includes the following non-IFRS financial measures: underlying earnings before tax, income tax, income before tax and market consistent value of new business. These non-IFRS measures are calculated by consolidating on a proportion