Aegon Ltd. · EURONEXT:AGN
Aegon — Sanford Bernstein Conference, London 2008
24 slides from Aegon's conference presentation, Sep 24, 2008
Slide 1: Unlocking the global potential
Unlocking the global potential Jos Streppel – CFO Sanford Bernstein Conference, London, 24 September 2008 Unlocking the global potential 1
Slide 2: Key messages
Key messages AEGON well positioned to weather the storm o Strong balance sheet o Substantial financial flexibility o Ample liquidity Implementing new growth strategy o Ambitious targets to increase value of new business, underlying earnings and return on equity Unlocking the global potential 2
Slide 3: AEGON well positioned for downturn in financial markets
AEGON well positioned for downturn in financial markets 2006 o Improvements and diversification in US investment portfolio o AEGON first in market to announce subprime exposure; transparency to all stakeholders 2007 o Maintained focus on capital management, cash flow and excess capital to improve ca
Slide 4: AEGON well positioned for downturn in financial markets
AEGON well positioned for downturn in financial markets o Risk reductions across the group implemented over last 5 years - Insignificant direct equity exposure - Interest rate risks lowered - Guarantees on products lowered - Hedging of guarantees - Asset and liability matching - Liquidity risk manag
Slide 5: Insignificant direct equity exposure
Insignificant direct equity exposure Total investments General account Shares EUR 344 billion EUR 127 billion EUR 3.5 billion Off balance sheet Loans Canadian 27% 18% Universal Life Other 19% 7% Other Real estate 40% 2% General Shares account 3% 37% Private Equities Policyholder Bonds equity& accoun
Slide 6: Improvement of quality in US investment portfolio
Improvement of quality in US investment portfolio Subprime investments o Shift to lower risk asset classes o Allocating more to higher rated assets 27% 40% 65% 73% 74% 70% 70% 49% 2001 2002 2003 2004 2005 2006 2007 1H08 o Stress tests of various MBS AAA AA A BBB BIG exposures show manageable losses,
Slide 7: AEGON USA credit losses are low
AEGON USA credit losses are low Credit losses in bps of assets (includes only bonds and mortgages) 82 64 44 44 48 37 27 25 17 average of 22 bps since 1990 17 9 8 8 1 2 4 2 1 -2 -6 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Q1 Q2 2008 2008 o US credit im
Slide 8: Equity market impact on earnings and capital
Equity market impact on earnings and capital Impact on earnings* Impact on capital* (12 month period, EUR million) (EUR million) Assumed Assumed equity market equity market decline of 10% 20% decline of 10% 20% -200 -200 -450 -500 o Lower fees o Direct exposure o Reserve strengthening for guarantees
Slide 9: Manageable impact of potential credit impairments
Manageable impact of potential credit impairments Impact on IFRS net income Deferred IFRS net IFRS net Losses DAC offset taxes income income Assumption: • 100 bps of losses on USD 120 billion of assets* -445 -624 (USD million) (EUR million) 336 • 20% DAC offset -1,200 240 (possible range 0% – 60%, I
Slide 10: Strong capital position
Strong capital position Excess capital in operating units (EUR million) Financial flexibility (EUR billion) 157 66 (432) 1,015 (78) 102 14 842 1.8 1.6 1Q08 Statutory Investments Impact of Other Change in Net 2Q08 Excess earnings in country dividend capital target currency Excess Capital units paid t
Slide 11: Liquidity risk management is key
Liquidity risk management is key Liquidity management o Extreme possibility of ‘frozen’ markets for years anticipated (EUR billion) (Ratio) 80 8 o Impaired capital markets liquidity 60 6 test assumes an extended period 40 4 and normal liquidity only resuming in 2 years 20 2 0 0 o Our liquidity posit
Slide 12: Strategic priorities to improve performance
3 strategic priorities to improve performance 1 Reallocate capital towards businesses with higher growth and return prospects 2 Improve growth and returns from existing businesses 3 Manage AEGON as an international group Unlocking the global potential 12
Slide 13: Ambitious targets
Ambitious targets Grow value of new business to EUR 1.25 billion by 2010 o Delivering on increased 2010 target Earnings growth of at least 10% p.a. to 2012 o Average net underlying earnings growth target in excess of 10% p.a. to 2012 from 2007 base of EUR 2,033 million (at 2007 constant currency) Re
Slide 14: Optimize capital allocation
Optimize capital allocation Business mix Geographic mix o Continuous assessment of Capital allocation group portfolio 5-10% Global businesses 15-25% New markets* o Strict strategic and financial 10% criteria - Core business: 30% 25-35% Western Europe fits life cycle need - Growth - Returns / risk 60
Slide 15: Strong position in Spain
Strong position in Spain 6th largest life insurer in Spain Key financials 2007 Gross written premiums* EUR 1.2 billion Value of new business** EUR 128 million Embedded value** EUR 765 million *** Underlying earnings pre-tax EUR 33 million JV’s with regional savings banks 2004 Caja Mediterráneo 2005
Slide 16: Key player in Central & Eastern Europe
Key player in Central & Eastern Europe Ambition to achieve market leadership (top 5) in all our markets Life Pensions Hungary #2 #2 Key financials 2007 Poland #3 #5 Gross written premiums EUR 1.1 billion Slovakia ● #3 Value of new business EUR 72 million Romania ● #7 Embedded value EUR 933 million C
Slide 17: Successful execution of growth strategy in Asia
Successful execution of growth strategy in Asia AEGON Asia AEGON- AEGON Regional HQ AEGON AEGON CNOOC JV Industrial JV Hong Kong Taiwan Taishin JV China Established in 2007 Taiwan China Japan India Taiwan Hong Kong Thailand Singapore India AEGON AEGON Regional presence with global businesses Japan R
Slide 18: Executing on capital efficiency
Executing on capital efficiency o Release of EUR 315 million through innovative securitization o Monetizing future profits from books of unit-linked business in the UK o Enhancing the Group’s financial flexibility o Execution underlines continued trust in AEGON’s capital position o Further opportuni
Slide 19: Changing fundamentals creating attractive prospects
Changing fundamentals creating attractive prospects Fundamental demographic and economic changes… o increasing longevity and ageing populations o global wealth creation, extending into new markets o financial market volatility o reduced safety net from government, employers and family …generating ne
Slide 20: AEGON: an attractive investment case
AEGON: an attractive investment case o Strong balance sheet, substantial financial flexibility and ample liquidity o Strategic capital management, focused on maximizing returns on capital o Updated strategy to enhance value creation by unlocking global potential o Pure life and pensions company with
Slide 21: Q&A
Unlocking the global potential Q&A Unlocking the global potential Unlocking the global potential 21
Slide 22: For questions please contact Investor Relations
Unlocking the global potential For questions please contact Investor Relations +31 70 344 8305 ir@aegon.com P.O. Box 85 2501 CB The Hague The Netherlands Unlocking the global potential 22
Slide 23: Upcoming events
Upcoming events 8-9 October 2008 Merrill Lynch Conference, London Alex Wynaendts 6 November 2008 AEGON Q3 2008 Results 13 November 2008 Cheuvreux Conference, New York Jos Streppel 24 November 2008 AEGON Analyst and Investor Day, London 4 December 2008 Société Générale Conference, Paris Alex Wynaendt
Slide 24: 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