Aegon Ltd. · EURONEXT:AGN
Aegon — Q4 2010 Earnings Presentation
35 slides from Aegon's earnings presentation, Feb 24, 2011
Slide 1: Fourth quarter 2010 results
Fourth quarter 2010 results Alex Wynaendts CEO AEGON aims to deliver sustainable earnings growth with an improved risk-return profile Analyst & investor presentation February 24, 2011
Slide 2: Disclaimer
Disclaimer Registration statement AEGON has filed a registration statement (including a prospectus) with the SEC for the equity offering described in this presentation. Before you invest, you should read the prospectus in that registration statement and other documents AEGON has filed with the SEC f
Slide 3: Today's announcements
Today’s announcements Q4 2010 results Underlying earnings before tax of EUR 489 million Net income of EUR 318 million Excess capital of EUR 3.8 billion Equity raising Equity issuance of 10% to repurchase core capital securities – to maintain strong capital buffer – to achieve core capital of
Slide 4: Continued strong underlying earnings in the fourth quarter
Continued strong underlying earnings in the fourth quarter Underlying earnings before tax up 2% to Underlying earnings before tax EUR 489 million and included: (EUR million) – Charge of EUR 30 million related to customer redress in the UK – Release of EUR 28 million related to employee benefit pla
Slide 5: Continued strong sales and deposits demonstrating solid franchise
Continued strong sales and deposits demonstrating solid franchise Robust new life sales New life sales – US: growth in retail sales offset by lower life (EUR million) reinsurance sales – NL: strong pension sales – UK: lower annuities sales, partly offset by higher group pension sales – New Markets
Slide 6: Strong cash flow generation
Strong cash flow generation Earnings on in-force support strong cash flows Higher capital requirements in the Netherlands of EUR 225 million related to increased longevity Excess capital development Q4 2010 (EUR billion) 3.3 0.1 0.6 0.3 (0.4) (0.2) 0.1 3.8 1.7 Holding 1.3 Operational cash flow E
Slide 7: Aim to repurchase all core capital from Dutch State
Aim to repurchase all core capital from Dutch State Fully repurchase 375m core capital securities (EUR 1.5bn + EUR 750m premium), funded by: – Today’s equity offering – Internal resources, including retained earnings and any proceeds from divestments Aim to achieve core capital of at least 75% o
Slide 8: Progress on Transamerica Reinsurance
Progress on Transamerica Reinsurance Limited long-term strategic fit with AEGON’s core businesses Reduction of relative weight of capital employed in the US Currently in negotiations with a party Progress in line with expectations Dublin Paris Seoul Madrid Tokyo Charlotte, NC Taipei Bermuda
Slide 9: AEGON aims for sustainable earnings growth with improved risk-return profile
AEGON aims for sustainable earnings growth with improved risk-return profile Sustainable earnings growth Improved risk-return profile transformed Strong capital position significantly Sustainable cash flows and dividends 9
Slide 10: AEGON aims to deliver:
AEGON aims to deliver: New base of underlying earnings in 2011, mainly as a result Sustainable earnings growth of strategic management actions Grow underlying earnings before tax on average 7-10% p.a.* from rebased level Further improve cost efficiency in established markets Improve the geog
Slide 11: New base of underlying earnings in 2011
New base of underlying earnings in 2011 New base of underlying earnings in 2011, mainly due to strategic management actions Execution New base of underlying earnings before tax in 2011, due to strategic management actions (full year impact): Potential divestment Transamerica Re (EUR 80 million)
Slide 12: AEGON aims to deliver sustainable earnings growth
AEGON aims to deliver sustainable earnings growth Grow underlying earnings before tax by, on average, 7% to 10% p.a.* Further improve cost efficiency in established markets Improve the geographical balance of capital allocation Execution Growth and improved cost efficiency in established mar
Slide 13: AEGON aims to improve its risk-return profile
AEGON aims to improve its risk-return profile Generate return on equity of 10% to 12% medium term Increase fee businesses to 30% to 35% of annual underlying earnings before tax by 2015 Execute on credit and interest rate risk reduction Execution Increase fee business Underlying earnings befo
Slide 14: AEGON aims to deliver sustainable cash flows and dividends
AEGON aims to deliver sustainable cash flows and dividends Improve operational free cash flow from current normalized level of EUR 1.0-1.2 billion by 30% by 2015 Pay a sustainable dividend based on free cash flow and capital position Execution Free cash flow generation: 2010 free cash flow EUR
Slide 15: AEGON aspires to be a company that delivers:
AEGON aspires to be a company that delivers: Sustainable earnings growth Improved risk-return profile Strong capital position Sustainable cash flows and dividends 15
Slide 16: Q&A
Q&A EGON ASSET MANAGEMENT LIFE INSURANCE
Slide 17: Appendix – dividend policy
Appendix — dividend policy : : A LIFEINSURANCE ; PENSIONS ; ASSET MANAGEMENT WEGON
Slide 18: AEGON's dividend policy
AEGON’s dividend policy AEGON N.V. aims to pay out a sustainable dividend to allow equity investors to share in the performance of the company, which can grow over time if performance of the company so allows. After investment in new business to generate organic growth, capital generation in AEGON
Slide 19: Appendix – Q4 2010 results
Appendix — Q4 2010 results : : A LIFEINSURANCE ; PENSIONS ; ASSET MANAGEMENT WEGON
Slide 20: Underlying earnings increased due to Americas and New Markets
Underlying earnings increased due to Americas and New Markets Americas’ earnings up 6%, including benefit plan release of USD 38 million Earnings in the Netherlands lower due to adverse mortality and lower investment income Earnings in the UK impacted by GBP 25 million customer redress charge
Slide 21: Operating expenses increased, mainly due to currency effects
Operating expenses increased, mainly due to currency effects Compared with Q4 2009 operating expenses remained level at constant currencies – Savings and lower benefit plan costs in the Americas were offset by restructuring costs FY 2010 operating expenses of EUR 3.4 billion increased 3% compare
Slide 22: Net income driven primarily by strong underlying earnings
Net income driven primarily by strong underlying earnings Investment gains due to sale of multiple US mineral estates and normal trading in bond portfolios Impairments mainly due to US real estate related securities and Irish banks Other charges impacted by: – Wind down small bank BOLI and COL
Slide 23: Strong pension business drives sales and deposits
Strong pension business drives sales and deposits New life sales stable; higher pension sales in the Netherlands and strong sales in Central & Eastern Europe offset by declines in the Americas and the UK Gross deposits* up on higher US pension and variable annuity deposits partly offset by de- e
Slide 24: Robust new life sales demonstrate continued strong franchise
Robust new life sales demonstrate continued strong franchise New life sales stable at EUR 558 million – Americas’ sales declined as higher retail sales were offset by lower reinsurance sales – The Netherlands increased considerably due to sizeable pension contracts – UK decreased as higher pension
Slide 25: Continued strong gross deposits
Continued strong gross deposits Gross deposits* of EUR 7.8 billion, an increase of 16% compared with Q4 2009 – Strong asset management and US pension deposits – Growth of variable annuities was offset by de-emphasized fixed annuities and lower inflows in retail mutual funds Net outflow* of EUR 0
Slide 26: US pension business benefits from high quality service offered
US pension business benefits from high quality service offered US pension business continues to show strong results FY 2010 production of US pension net deposits rose 70% to USD 8.2 billion Withdrawal rates remain historically low at 12.2% as a result of the high quality service offered Pensio
Slide 27: Value of new business
Value of new business Value of new business EUR 141 million, lower due to strategic change in business mix: – lower margins in life reinsurance and lower sales of fixed annuities in the US – higher pension sales were offset by lower life margins in the Netherlands – decrease of margins and lower i
Slide 28: Shareholders' equity decreases on lower revaluation reserves
Shareholders’ equity decreases on lower revaluation reserves Shareholders' equity declines in Q4 as higher interest rates had a negative impact on the revaluation reserve Excluding the revaluation reserve, shareholders’ equity rose 17% during 2010 Positive revaluation reserve of EUR 1 billion
Slide 29: Americas
Americas Underlying earnings before tax increased 6% to USD 543 million, mainly due to a one time release of USD 38 million related to employee benefit plan, cost savings, growth of the pension business and improved financial markets New life sales decreased 9% as higher retail sales were more t
Slide 30: The Netherlands
The Netherlands Solid underlying earnings before tax of EUR 87 million New life sales increased to a record EUR 113 million by securing a number of sizeable group pensions contracts Net outflows of EUR 260 million due to lower saving deposits as a result of lower interest offered Underlying ea
Slide 31: United Kingdom
United Kingdom Underlying earnings before tax decreased to GBP -6 million – Life earnings were impacted by adverse mortality results – Pensions recorded a loss due to a customer redress charge of GBP 25 million New life sales down 15%; annuity sales were lower due to a combination of lower marke
Slide 32: New Markets
New Markets Underlying earnings before tax increased as a result of growth in VA Europe and the inclusion of asset management partly offset by investments in Asia New life sales improved due to business growth in CEE* and Asia Net deposits increased due to inflows of asset management – Deposit
Slide 33: Limited exposure to peripheral European sovereigns actively reduced
Limited exposure to peripheral European sovereigns actively reduced EUR million * Sept 30,2010 Dec. 31, 2010 Portugal 48 32 ▼ Greece 72 45 ▼ Ireland 90 32 ▼ Italy 107 112 ▲ Spain 1,218 904 ▼ * At fair value 33
Slide 34: Upcoming AEGON events
Upcoming AEGON events March May June Citigroup Conference, Q1 2011 results and Goldman Sachs Conference, New York City Embedded Value 2010 Paris March 10, 2011 May 12, 2011 June 8, 2011 Morgan Stanley Financials Annual General Meeting, Analyst & Investor Conference, London The Hague Conference, Lond
Slide 35: For questions please contact Investor Relations
For questions please contact Investor Relations T: +31 70 344 8305 E: ir@aegon.com www.aegon.com P.O. Box 85 2501 CB The Hague The Netherlands