Aegon Ltd. · EURONEXT:AGN
Aegon — Q1 2015 Earnings Presentation
34 slides from Aegon's earnings presentation, May 13, 2015
Slide 1: Aegon reports Q1 2015 Results
Aegon reports Q1 2015 Results The Hague – May 13, 2015 Alex Wynaendts Darryl Button CEO CFO
Slide 2: Earnings impacted by adverse claims experience
Earnings impacted by adverse claims experience Underlying earnings impacted by adverse claims experience and low interest rates in the US Sales growth across the group; new business remains profitable despite low interest rates Strong operational free cash flows and solid excess capital positi
Slide 3: Underlying earnings impacted by adverse claims experience in the US
Underlying earnings impacted by adverse claims experience in the US Adverse claims experience and the impact of low interest rates in the United States main drivers of weaker earnings Holdings impacted by reclassification of interest charges Earnings in CEE lower as a result increased surrende
Slide 4: 32% sales growth to EUR 2.8 billion driven by continued strong deposits
32% sales growth to EUR 2.8 billion driven by continued strong deposits Record gross deposits of EUR 18.7 billion driven by US pensions, third-party asset management flows and NL retail savings ► Record net deposits of EUR 7.5 billion Higher life sales mainly due to stronger universal life produ
Slide 5: Record gross and net deposits
Record gross and net deposits Americas’ gross deposits of USD 13.0 billion due to continued growth of fee businesses ► Variable annuity deposits up 15% to USD 2.3 billion; net deposits of USD 1.0 billion ► Retirement plan deposits up 12% to USD 9.3 billion; net deposits of USD 4.6 billion Gross
Slide 6: Deleveraging creates financial flexibility
Deleveraging creates financial flexibility Gross financial leverage and fixed charge coverage both well within target ranges ► Outstanding leverage cut by ~25% since 2011 Holding excess capital of EUR 1.4 billion in combination with leverage capacity provides financial flexibility ► 1% of levera
Slide 7: Solvency II range confirmed; uncertainties remain
Solvency II range confirmed; uncertainties remain EEA Non-EEA Holding Group Netherlands (IM) United Kingdom (IM) + US life RBC ratio – Senior leverage net = Cash flows driven by conversion local ratios Spain (SF) of excess capital Non-regulated and Updated capital CEE (SF) Requir
Slide 8: Key messages
Key messages Earnings impacted by adverse claims experience and low interest rates Q1 results Continued strong momentum drives record sales and deposits Capital and risk Solid capital position supported by strong operational free cash flows management Gross financial leverage of 27.8% provid
Slide 9: Appendix continued Q1 2015 results
Appendix continued Q1 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 10: Index
Index Press subject to go directly to the slides or continue with presentation 1Q15 1Q15 1Q15 1Q15 Strategy Financials Country Reconciliation support specific tables, assumptions & sensitivities Slide 11-15 Slide 16-24 Slide 25-28 Slide 29-33 10
Slide 11: Aegon at a glance
Aegon at a glance Over 170 Life insurance, pensions years of & asset management history Underlying earnings before tax of Present in more EUR 469 million in Q1 2015 than 25 markets Life 10% 9% 1% throughout 7% Americas 25% Individual Savings and Retirement The Netherlands the Americas, 57% United Ki
Slide 12: Focus on pension participants driving business growth
Focus on pension participants driving business growth 3.8 million 3.7 million 1.9 million Participants +8% +16% +6% USD 144 billion EUR 72 billion GBP 53 billion total +18% +14% GBP 4 billion platform Balances Unique proposition One strategy Helping people take responsibility for their financial fut
Slide 13: Managing variable annuities for profitability
Managing variable annuities for profitability Reporting is aligned with the way VA business is managed Both core variable annuities and the closed block are managed for profitability Fair value guarantees on core block fully hedged to rates, equities and equity volatility Closed block equity
Slide 14: 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 products Responsible Investment Policy and investing in loc
Slide 15: Underlying earnings down to EUR 469 million
Underlying earnings down to EUR 469 million Lower earnings in Americas as growth in VA Underlying earnings before tax and pensions more than offset by adverse claims experience and the impact of lower Americas The Netherlands (USD million) (EUR million) interest rates Higher earnings in NL prima
Slide 16: Net income of EUR 316 million
Net income of EUR 316 million Fair value items amounted to a loss of EUR 159 million, mainly driven by hedging programs in the US and interest rate swaps on perpetuals at the Holding Gains on investments increased to EUR 119 million, primarily related to hedge rebalancing in a low rate environme
Slide 17: Fair value items impacted by hedge programs and interest rates swaps
Fair value items impacted by hedge programs and interest rates swaps Total fair value items of EUR (159) million FV hedging with FV hedging without accounting match accounting match FV investments FV other EUR 133 million EUR (258) million EUR 0 million EUR (34) million Derivatives ∆: EUR 2,523m Der
Slide 18: Record gross deposits of EUR 18.7 billion
Record gross deposits of EUR 18.7 billion Record high gross deposits in the Americas Gross deposits driven by variable annuities and pensions Americas The Netherlands Higher gross deposits in the Netherlands (USD billion) (EUR billion) driven by strong performance from Knab and continued growth
Slide 19: New life sales were up 20% to EUR 551 million
New life sales were up 20% to EUR 551 million New life sales in Americas stable as higher New life sales universal life sales were offset by divestment of Canada and withdrawal of UL Americas The Netherlands (USD million) (EUR million) second guarantee product Higher new life sales in the Nether
Slide 20: MCVNB of EUR 140 million, despite persistent low interest rates
MCVNB of EUR 140 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 MCVNB in the Netherlands increased, (USD million) (EUR million) primarily driven by higher rec
Slide 21: Operational free cash flows and holding excess capital
Operational free cash flows and holding excess capital Operational free cash flows* of EUR 339 million ► One-time items of EUR 241 million mostly due to tax benefits in the Americas ► Market impacts of EUR 273 million driven by impact of credit spread movements in the Netherlands Holding excess
Slide 22: Group and local capitalization levels
Group and local capitalization levels Group IGD solvency ratio improved to 216% Excess capital in the United States of USD ~1.5 billion over S&P AA level; USD 700 million half-year dividend to be paid to the holding in Q2 IGD ratio in the Netherlands of ~235%; Pillar 1 ratio in the UK down to
Slide 23: 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 2.6% year to date Capital intensive run-off businesses negatively impact return on equity ► Capital allocated to run-off businesses included in
Slide 24: Americas
Americas Lower earnings as growth in VA and Underlying earnings Operating expenses pensions was more than offset by adverse before tax (USD million) (USD million) claims experience and an adjustment for low interest rates in L&P Operating expenses decreased resulting 414 467 453 483 450 from the
Slide 25: The Netherlands
The Netherlands Higher earnings primarily due to higher Underlying earnings Operating expenses investment income and lower funding cost, before tax (EUR million) (EUR million) partly offset by an increase in non-life claims Increase in operating expenses driven by restructuring costs of non-life
Slide 26: United Kingdom
United Kingdom Underlying earnings up to GBP 28 million Underlying earnings Operating expenses due to lower technology expenses and before tax (GBP million) (GBP million) positive market movements Decrease in operating expenses is mainly due to absence of business transformation 28 117 22 22 cos
Slide 27: New Markets
New Markets Earnings growth in Aegon Asset Underlying earnings Operating expenses Management more than offset by lower before tax (EUR million) (EUR million) earnings in CEE and divestments Operating expenses up 23% to EUR 192 million due to currency movements and 61 198 192 51 business growth 3
Slide 28: Reconciliation of effective tax rate Q1 2015
Reconciliation of effective tax rate Q1 2015 New Markets/ EUR million Americas The Netherlands United Kingdom Total Holdings Income before tax 175 396 39 (184) 425 Nominal tax rate 35.0% (60) 25.0% (99) 20.25% (8) N/A 51 (116) Actual income tax (30) (92) (21) 35 (109) Net income 145 304 18 (150) 316
Slide 29: General account investments roll-forward
General account investments roll-forward EUR billion Americas The Netherlands United Kingdom New Markets & Other Opening balance January 1, 2015 83.5 51.9 13.2 4.8 Net in- and outflow 1.2 1.7 0.0 0.2 Unrealized / realized results 0.9 2.1 0.4 0.1 Foreign exchange 10.7 0.0 1.0 0.4 Closing balance Marc
Slide 30: 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 2024 and 6% thereafter Annual gross equity market returns of
Slide 31: 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 32: 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 33: Upcoming events
Upcoming events May June Annual General Meeting JP Morgan insurance of Shareholders conference The Hague London May 20, 2015 June 2, 2015 Barclays UK savings conference London June 3, 2015 Citi conference New York June 5, 2015 Goldman Sachs financials conference Rome June 15, 2015 33
Slide 34: 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