Aegon Ltd. · EURONEXT:AGN
Aegon — Q1 2013 Earnings Presentation
35 slides from Aegon's earnings presentation, May 8, 2013
Slide 1: Q1 2013 Results
Q1 2013 Results The Hague – May 8, 2013 Alex Wynaendts CEO aegon.com
Slide 2: Key messages
Key messages Execution of strategy to get closer to our customers Continued sales momentum in accumulation and at-retirement products Solid underlying earnings Strong capital position and cash flows Demand for life insurance and pension solutions drives sales growth and value of new business
Slide 3: Continued delivery of strong results
Continued delivery of strong results Underlying earnings before tax Fee-based earnings Sales/MCVNB (EUR million) (% of UEBT) (EUR million) 1,758 1,813 1,738 461 445 35 36 33 439 204 232 125 Q1 12 Q4 12 Q1 13 Q1 12 Q4 12 Q1 13 Q1 12 Q4 12 Q1 13 Market consistent value new business Return on equity
Slide 4: Delivery on strategic objectives
Delivery on strategic objectives 50% stake in CAM sold for EUR 449.5 million; realized EUR 1 billion from Spanish divestments (CAM, Cívica, Unnim) Acquisition in Ukraine closed, integration process started Shift from spread to fee-based products; strong VA, pension, mutual fund sales and reduc
Slide 5: Increasing direct engagement with customers
Increasing direct engagement with customers Launch of Transamerica Direct creating one of the first full-service online insurance solutions Americas Combining traditional and social channels to better understand and engage with customers The Launch of one of the world’s first Facebook insurers
Slide 6: Sales momentum continues – evidence of our strategic focus
Sales momentum continues – evidence of our strategic focus New life sales increased 12% to EUR 499 million ► Life single premiums in the Netherlands rose 41% driven by Dutch pensions following strong market proposition and higher mortgage production in anticipation of changes in fiscal regulation
Slide 7: Strict pricing discipline drives 86% increase in market consistent VNB
Strict pricing discipline drives 86% increase in market consistent VNB Market consistent value of new business in the Americas doubled Market consistent VNB ► VA benefited from continued sales momentum and higher interest rates (EUR million) 232 ► Life up on repricing and redesign of products 204
Slide 8: Underlying earnings stable despite divestments in Spain
Underlying earnings stable despite divestments in Spain Americas up on growth in pensions and life partly offset by lower fixed annuity earnings as well as higher sales and employee performance related expenses of EUR 13 million Underlying earnings in the Netherlands up on improvement in Life &
Slide 9: Net income impacted by fair value items loss
Net income impacted by fair value items loss Fair value items impacted by equity hedging losses following strong equity markets Gains on investments are the result of normal trading and asset liability management Impairments, at 5 year low, mainly related to mortgages in the Netherlands and Hu
Slide 10: Increased equity hedging to protect the capital base
Increased equity hedging to protect the capital base Additional hedging put in place during 4Q12 – equity collar macro hedge ► Provides tail risk protection in extreme market conditions – increased protection against down market scenarios while decreasing equity exposure in up markets ► IFRS resul
Slide 11: Operating expenses up on performance and sales related expenses
Operating expenses up on performance and sales related expenses Expenses in the Americas increased mainly on higher performance and sales related expenses of EUR 13 million partly offset by cost savings Cost savings drove lower expenses in the Netherlands offset by investments in new distributio
Slide 12: Group and local capital positions remain strong
Group and local capital positions remain strong Strong IGD ratio of 224% despite negative IAS 19 impact of 13% US RBC ratio of ~485%; NL IGD ratio of ~265%; UK Pillar 1 ratio of ~120% Holding excess capital decreased to EUR 1.8 billion driven by expenses and interest payments Capital base ra
Slide 13: Key messages
Key messages Execution of strategy to get closer to our customers Continued sales momentum in accumulation and at-retirement products Solid underlying earnings Strong capital position and cash flows 13
Slide 14: Appendix
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 15: Significant sales increase in US variable annuities and retail mutual funds
Significant sales increase in US variable annuities and retail mutual funds Variable annuity gross deposits 34% higher to USD 1.6 billion US variable annuity deposits (USD million) 1,622 ► Adding scale and diversification through alternative distribution channels 1,441 1,214 • Launched private lab
Slide 16: Early signs of success for UK platform
Early signs of success for UK platform At Retirement Workplace Total UK sales up 37% on accelerated platform sales, auto enrollment, strong Client Advisor Scheme Employer Employee group pension sales and a successful Advisor marketing campaign Portfolio Planning Online Transaction Online Valuation
Slide 17: Unique opportunity in Dutch pension market
Unique opportunity in Dutch pension market Dutch pension funds seeking insured solutions NL pension premiums ► Buy out market for liquidating pension funds creates unique opportunity (EUR million) • 300 pension funds (OPF), EUR 6 billion in annual premiums, EUR 175 billion assets and 700,000 activ
Slide 18: High quality Dutch mortgage portfolio
High quality Dutch mortgage portfolio Aegon’s Dutch residential mortgage portfolio amounts to EUR 22.8 billion by the end of Q1 2013 ► Representing a market share of 3.5% of outstanding mortgages Mortgage loss development shows a historically strong performance of the portfolio ► 55% of Aegon’s
Slide 19: Continued strong operational free cash flows
Continued strong operational free cash flows Operational free cash flows of EUR 560 million excluding market impacts Earnings on in-force and release of required surplus strong due to one-time items amounting to EUR 233 million ► Additional unclaimed property accrual in the Americas more than of
Slide 20: Focus on delivering on targets
Focus on delivering on targets Achieve return on equity of Grow underlying earnings Double fee-based earnings to Increase annual normalized before tax by operational free cash flow to 10-12% 7-10% 30-35% € 1.3-1.6 on average per annum billion by 2015 between 2010 and 2015 of underlying earnings by 2
Slide 21: Main economic assumptions
Main economic assumptions Main US economic assumptions 10-year US Treasury assumption of 4.75% Credit spreads are assumed to grade down over two years to 110 bps Bond funds are assumed to return 4% for 5 years and 6% thereafter Money market rates are assumed to remain flat at 0.1% for two ye
Slide 22: Limited exposure in general account to peripheral European countries
Limited exposure in general account to peripheral European countries Total exposure to peripheral European sovereigns only 0.7% of general account Corporate debt mainly related to defensive sectors, for example utilities Exit of Unnim and CAM will reduce peripheral exposure by ~EUR 920 million
Slide 23: New life sales of EUR 499 million
New life sales of EUR 499 million New life sales decreased in the Americas driven by lower universal life sales due to product withdrawals and product redesign Higher pension sales in the Netherlands resulting from improved competitive position Sales in the UK increased 37% driven by higher gr
Slide 24: Variable annuities and retail mutual funds drive strong gross deposits
Variable annuities and retail mutual funds drive strong gross deposits US variable annuity deposits increased 34%, despite re-pricing to ensure profitability Retail mutual fund deposits increased 57%, strong across all distribution channels Strong retirement plan deposits driven mainly by succ
Slide 25: Market consistent value of new business of EUR 232 million
Market consistent value of new business of EUR 232 million MCVNB for the Americas increased due to sales growth and improved markets for variable annuities and active repricing and redesign of life products MCVNB in the Netherlands up primarily due to lower funding costs for mortgages and increa
Slide 26: Underlying earnings increased to EUR 445 million
Underlying earnings increased to EUR 445 million Americas’ earnings supported by continued business growth, primarily in pensions and Life & Protection Earnings growth in the Netherlands driven by favorable funding rates and reduced expenses Lower earnings in the UK as the benefit from higher
Slide 27: Americas
Americas Underlying earnings before tax increased as continued business growth in pensions and life was only partially offset by lower fixed annuity earnings Operating expenses increased as higher sales and employee performance related expenses more than offset realized cost savings New life s
Slide 28: The Netherlands
The Netherlands Higher underlying earnings before tax driven primarily by favorable funding rates and lower expenses Operating expenses decreased as realized benefits from cost savings program more than offset investments in new distribution capabilities Higher pension sales resulting from an
Slide 29: United Kingdom
United Kingdom Underlying earnings before tax decreased as the benefit from higher equity markets was offset by adverse persistency following implementation of the Retail Distribution Review Higher operating expenses were driven by the non-recurrence of favorable timing differences and higher bu
Slide 30: New Markets
New Markets Underlying earnings before tax declined mainly driven by divestments in Spain Operating expenses increased as the result of higher costs in CEE, Asset Management, Asia and VA Europe driven by investments to support future growth New life sales lower as stable sales in CEE and highe
Slide 31: Capital allocated to run-off businesses
Capital allocated to run-off businesses Current capital allocated to run-off businesses of USD 2.4 billion ► Return on capital of run-off businesses of 0.2% year to date Capital intensive run-off businesses negatively impact return on equity ► Capital allocated to run-off businesses is included
Slide 32: General account investments roll-forward
General account investments roll-forward General account investment roll-forward EUR billion Americas The Netherlands United Kingdom New Markets & Other Opening balance December 31, 2012* 86.5 43.1 11.3 4.3 Net in- and outflow (1.4) 0.9 0.0 0.1 Unrealized / realized results (0.4) (0.1) 0.1 (0.2) For
Slide 33: Reconciliation of effective tax rate Q1 2013
Reconciliation of effective tax rate Q1 2013 Reconciliation of effective tax rate Q1 2013 EUR million Americas The Netherlands United Kingdom New Markets/ Holdings Total Income before tax 109 67 27 34 237 Nominal tax rate 35.0% (38) 25.0% (17) 24.5% (6) NM (7) (68) Actual income tax 0 (8) (9) (16) (
Slide 34: For questions please contact
For questions For questions please please contact contact Investor Group Corporate RelationsCommunications +31 70 +31 70 344 344 8305 8956 gcc@aegon.com ir@aegon.com P.O. Box P.O. Box 85 85 2501 CB 2501 CB The The Hague Hague The Netherlands The Netherlands Download IR & Media App in the appstore
Slide 35: Disclaimer
Disclaimer Cautionary note regarding non-IFRS measures This document includes the 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 proportionate basis A