Aegon Ltd. · EURONEXT:AGN
Aegon — Cheuvreux Conference 2008
29 slides from Aegon's conference presentation, Nov 13, 2008
Slide 1: Weathering the global financial crisis
Weathering the global financial crisis Jos Streppel, CFO Cheuvreux Conference – New York City – November 13, 2008 Unlocking the global potential 1
Slide 2: AEGON at a glance
AEGON at a glance o Focus on Life & Pensions o 33,000 employees worldwide o 40 million customers worldwide o Revenues 9M08: EUR 8.1 billion o EUR 350 billion in revenue generating investments o Underlying earnings before tax 9M08 : EUR 1.8 billion Unlocking the global potential 2
Slide 3: Focus on life & pensions
Focus on life & pensions 99% of earnings generated by core businesses Underlying earnings before tax 9M08 Life and protection 3% 1% Individual savings and retirement products 17% Pensions and asset management Institutional products Life reinsurance Distribution & general insurance 45% 18% 16% Unlock
Slide 4: Fundamentally attractive industry
Fundamentally attractive industry Attractive prospects for life insurance and pension companies: o Fundamental demographic and economic changes ... generating new customers and new needs… … driving demand for financial solutions o Opportunities arising from current market conditions Unlocking the gl
Slide 5: AEGON well positioned
AEGON well positioned o Financial markets impacted Q3 earnings, but fundamentals remain intact o Significant capital buffer to weather the storm o Committed to maintain capital level equivalent to AA rating requirements o Unrealized losses are not a proxy for impairments o AEGON has ample liquidity
Slide 6: Strategic priorities to improve performance
3 strategic priorities to improve performance Reallocate capital towards Geographic mix businesses with higher 1 growth and return Capital allocation prospects 5-10% Global businesses 15-25% New markets* 10% Improve growth and returns 2 from existing businesses 30% 25-35% Western Europe 60% 40-50% U
Slide 7: Underlying earnings impacted by world financial markets turmoil
Underlying earnings impacted by world financial markets turmoil o Underlying earnings before tax in Q3 impacted by – lower fees in US and UK – reserve strengthening, mainly related to VA’s sold pre-2004 in US – higher mortality charges in US life reinsurance – provisioning in NL for unit linked poli
Slide 8: Financial markets and impairments had a negative impact
Financial markets and impairments had a negative impact o Net income in Q3 mainly impacted by underperformance of fair value items and impairment charges – Impairment charges mainly related to Lehman Brothers, Washington Mutual (EUR336m) and US housing related asset-backed securities (EUR46m) Underl
Slide 9: New life sales
New life sales o Total Q3 new life sales down 18% at constant currency - Financial turmoil impacted sales of high net worth and middle market products in the US - Solid annuity and group pension sales in the UK, offset by individual pensions - Lower group pension sales in NL due to financial turmoil
Slide 10: Strong growth in net retail deposits
Strong growth in net retail deposits o Total Q3 net deposits of EUR 1.7 billion - Fixed annuities deposits in Americas: best quarter since 2003 - Variable annuities deposits in Americas relatively flat - Strong increase in deposits in Other countries driven by retail mutual funds and variable annuit
Slide 11: Proactive steps have been taken to improve capital efficiency
Proactive steps have been taken to improve capital efficiency o Significant risk reductions implemented - Limited direct equity exposure - Interest rate risks lowered - Guarantees on products lowered - Hedging of guarantees - Asset and liability matching o Disciplined liquidity management o Strong g
Slide 12: AEGON secured additional core capital of EUR 3 billion
AEGON secured additional core capital of EUR 3 billion Capital facility EUR 3 billion Public Market Vereniging AEGON Dutch State EUR ~89% of ~11% of 100% of Non-voting securities EUR common common preferred shares shares shares EUR 3 billion AEGON N.V. Unlocking the global potential 12
Slide 13: Reinforced capital position
Reinforced capital position AEGON to reinforce capital buffer significantly above AA level requirements Expected June 30, 2008 September 30, 2008 changes in Q4 + Underlying Capital Base Ratio earnings 74% 71.5% (debt / equity ratio) - Market S&P risk-based insurance movements capital model excess EU
Slide 14: Capital position after drawdown of additional capital
Capital position after drawdown of additional capital Pro-forma September 30, 2008 post draw down Insurance Group Directive EUR 5.0 billion EUR 8.0 billion (IGD) surplus capital (160%) (195%) S&P risk-based insurance capital model excess EUR 312 million EUR 312 million capital in operating units abo
Slide 15: Ongoing acceleration of de-risking and capital release
Ongoing acceleration of de-risking and capital release Capital preservation and risk mitigation actions important to enhance capital buffer Complete execution on identified capital preservation and risk mitigation actions of EUR 600 - 800 million in Q4, including: o Lowering investment risk – New mo
Slide 16: Equity market sensitivity increased due to market deterioration
Equity market sensitivity increased due to market deterioration Based on equity markets as of September 30, 2008 Estimated impact on earnings Estimated impact on capital (12 month period, EUR million) (EUR million) Assumed Assumed equity market equity market decline of 20% 40% decline of 20% 40% -70
Slide 17: Limited direct equity exposure
Limited direct equity exposure Total investments General account Shares EUR 351 billion EUR 132 billion EUR 3.3 billion Off balance Loans Indexed sheet 18% Universal 28% Life Other 21% 8% Other Real estate 39% 2% General Shares account 2% 37% Private Bonds equity& Equities Policyholder 70% hedge fun
Slide 18: Interest rate sensitivity
Interest rate sensitivity Based on interest rates as of September 30, 2008 Impact on earnings Impact on capital (12 month period, EUR million) (EUR million) Assumed* Assumed* interest rate interest rate decline of 1% 2% decline of 1% 2% 270 175 -250 -450 o Lower funding costs o Reserve strengthening
Slide 19: Active management of US investment portfolio
Active management of US investment portfolio Shifts in US investment portfolio EUR 83.3 billion(*) as per September 30, 2008 o Increased Cash position Cash/Treasuries/Agency o IG Corporate bond actions: High Yield Corporate – Reduced total exposure Emerging Markets Debt – Increased diversification A
Slide 20: Significant shift into higher rated assets
Significant shift into higher rated assets Subprime in US investment portfolio o As stated in previous EUR 2.7 billion as per September 30, 2008 presentations, AEGON USA has restructured its asset portfolio defensively in numerous ways: – Reducing and upgrading corporate exposures 40% 65% 73% 74% 70
Slide 21: Reduced exposure to financials
Reduced exposure to financials Financials as % of general account assets in US investment portfolio EUR 11.2 billion as per September 30, 2008 o Actively reduced financial sector exposure, esp. in 2007 and 2008 16.4% 15.7% 14.6% 12.3% 2005 2006 2007 Q3 YTD 2008 Corporate high yield as % of general a
Slide 22: Credit losses in the Americas remain manageable
Credit losses in the Americas remain manageable Credit losses in bps of assets (includes only bonds and mortgages) 82 64 54 48 44 44 37 average of 25 bps 27 25 since 1990 17 17 9 8 1 2 4 2 -6 -2 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 YTD 2008 o Duri
Slide 23: Impact of potential credit impairments manageable
Impact of potential credit impairments manageable Impact on IFRS net income Impact on available capital Impact on Impact on IFRS net IFRS net available available Losses DAC offset Taxes income income Losses DAC offset Taxes capital capital No DAC offset -445 -550 -624 -780 336 -1.200 420 -1.200 240
Slide 24: Strong liquidity position
Strong liquidity position Liquidity management Stress scenario Assumptions: o Extreme possibility of ‘frozen’ markets for (EUR billion) years anticipated 80 o Impaired capital markets liquidity test 60 assumes an extended period and normal liquidity only resuming in 2 years 40 20 Results: 0 o Our li
Slide 25: Well positioned for the future
Conclusions o Financial markets impacted earnings, but fundamentals remain intact o Significant capital buffer to weather the storm o Committed to maintain capital level equivalent to AA rating requirements o Unrealized losses are not a proxy for impairments o AEGON has ample liquidity Well position
Slide 26: Q&A
Unlocking the global potential Q&A Unlocking the global potential 26
Slide 27: Upcoming events
Upcoming events November 24, 2008 AEGON Analyst and Investor Day, London CEO December 4, 2008 Société Générale Conference, Paris CEO March 12, 2009 AEGON Full year 2008 results CEO April 22, 2009 AEGON Annual General Meeting SB May 14, 2009 AEGON Q1 2009 results and EV 2008 CFO June 9 and 10, 2009 A
Slide 28: 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
Slide 29: 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 29