Aegon Ltd. · EURONEXT:AGN
Aegon — Q4 2016 Earnings Presentation
30 slides from Aegon's earnings presentation, Feb 17, 2017
Slide 1: Q4 2016 Results
Q4 2016 Results Alex Wynaendts The Hague – February 17, 2017 CEO Helping people achieve a lifetime of financial security
Slide 2: Strong increase in earnings
Overview 2 Strong increase in earnings Solvency II ratio increased to 159% as a result of favorable markets • Underlying earnings up as a result of expense reductions, improved claims experience and higher interest rates • Increased Solvency II ratio well within target range; capital generation of E
Slide 3: Underlying earnings increased 27%
Earnings 3 Underlying earnings increased 27% Due to expense reductions, claims experience and favorable markets • Management actions lead to strong start of expense savings program • Positive adjustments to intangible assets in the US and Asia driven by higher interest rates • Higher account balance
Slide 4: Expense reductions ahead of 2016 target
Earnings 4 Expense reductions ahead of 2016 target Doubled US expense savings target following strong start • Expense savings annual run-rate of USD 90 million achieved in the Americas in 2016 - Annual run-rate savings significantly exceed the USD 60 million target for 2016 - Initial USD 150 million
Slide 5: Improved net income
Earnings 5 Improved net income As a result of earnings growth and one-time tax benefits Underlying earnings to net income development in Q4 2016 (EUR million) UEBT Q4 16 554 Fair value items (13) Fair value items Americas (EUR -226 million): Realized gains 36 • Macro hedge (-) • Low rate protection
Slide 6: Record 2016 deposits of EUR 100 billion
Sales 6 Record 2016 deposits of EUR 100 billion Growth mainly driven by Americas and Aegon Asset Management • Higher gross deposits in the Americas mainly resulting from an increase in Retirement Plans • Inflows on the UK platform and Aegon’s online bank Knab drive deposit growth in Europe • Asset m
Slide 7: Life sales reflect focus on profitability
Sales 7 Life sales reflect focus on profitability Accident & Health sales lower primarily due to product exits in the US • Lower life sales due to continued shift towards fee-based solutions in NL and universal life sales in the US being impacted by agent recruiting • Higher interest rates and produ
Slide 8: Increased Solvency II ratio
Capital 8 Increased Solvency II ratio Market impacts and capital generation drive Solvency II ratio up • Favorable development of credit spreads and interest rates are the main drivers of the increased ratio • One-time items mainly consisted of higher capital requirements as a result of a reposition
Slide 9: Holding excess capital of EUR 1.5 billion
Capital 9 Holding excess capital of EUR 1.5 billion Remittances in line with capital generation • Remittances from the Americas, asset management, CEE and Spain & Portugal exceeded the dividends paid to shareholders and funding & operating expenses at the Holding in 2016 • Excluding share buyback an
Slide 10: Full year 2016 dividend of EUR 0.26
Capital 10 Full year 2016 dividend of EUR 0.26 Fifth consecutive year of dividend growth • Proposed final dividend for 2016 of EUR 0.13 per common share* • Paid a sustainable growing dividend for five consecutive years • Remittances support growing dividends and investments in strategic priorities I
Slide 11: Executing on strategy
Strategy 11 Executing on strategy Continue transformation of US and UK businesses 2016 Achievements 2017 – 2018 Priorities • Align to functional • Divested annuity • Expense savings organization in US portfolio of EUR 350 million by end of 2018 • 5-part plan to • Acquired Cofunds improve returns and
Slide 12: Progress on financial targets
Strategy 12 Progress on financial targets Improved RoE and increased expense savings target Year-end Full year Commitment 2018 target 2016 results Strong sales growth CAGR of 10% >10% Reduce operating expenses EUR 350 million EUR 110 million Increase RoE 10% 8.0% Excess capital at Holding EUR 1.0 –
Slide 13: Appendix
13 Appendix For questions please contact Investor Relations +31 70 344 8305 [email protected] P.O. Box 85 2501 CB The Hague The Netherlands
Slide 14: Index
Appendix 14 Index Click subject to go directly to the section Q4 2016 Strategy Q4 2016 Capital and support Financials Assumptions Slide 15-17 Slide 18-23 Slide 24-29
Slide 15: Aegon at a glance
Strategy support 15 Aegon at a glance Focus History Employees Life insurance, pensions & Our roots date back to the Over 29,000 employees asset management for first half of the 19th century (December 31, 2016) 30 million customers 32% 7% Europe AAM 1% Asia Earnings Investments Paid out 60% Americas
Slide 16: Responsible business
Strategy support 16 Responsible business Embedded in our operations Our commitment: “To act responsibly and to create positive impact for all our stakeholders” Putting our customers at Having a responsible Empowering our Promoting retirement the center of what we do investments approach employees re
Slide 17: Raising awareness about retirement
Strategy support 17 Raising awareness about retirement Researching topics important to our clients Researching Educating Debating Published the 6th Aegon Retirement Readiness Two research reports offering historical trends Discussing pension reform in Brazil. survey covering 16,000 people in 15 coun
Slide 18: Underlying earnings
Financials 18 Underlying earnings Increased to EUR 554 million Underlying earnings before tax • Higher earnings in Americas mainly driven by Americas Europe expense savings, favorable claims experience and (USD million) (EUR million) higher interest rates • Earnings in Europe mainly increased as a r
Slide 19: Gross deposits
Financials 19 Gross deposits Remained solid at EUR 22.7 billion Gross deposits • Gross deposits in the Americas remained stable, as Americas Europe higher deposits in Retirement Plans resulting from the (USD billion) (EUR billion) Mercer acquisition were offset by lower deposits in Variable Annuitie
Slide 20: New life sales of EUR 240 million
Financials 20 New life sales of EUR 240 million As a result of lower pension sales in the Netherlands and lower US sales • New life sales in the Americas decreased mainly due to universal life sales from reduced recruiting • New life sales in Europe were down mainly as a result of shift to fee-based
Slide 21: MCVNB of EUR 118 million
Financials 21 MCVNB of EUR 118 million Impacted by lower US VA sales and divestment of the UK annuity book • Lower MCVNB in the Americas due to a lower contribution from Variable Annuities, resulting from lower sales following product adjustments and lower margin due to lower interest rates • MCVNB
Slide 22: Operating expenses
Financials 22 Operating expenses Decreased to EUR 978 million Operating expenses • Operating expenses in the Americas were stable, as Americas Europe the benefit of expense savings programs and lower (USD million) (EUR million) restructuring charges were offset by the Mercer acquisition and higher v
Slide 23: General account investments
Financials 23 General account investments By geography December 31, 2016 amounts in EUR millions, except for the impairment data Americas Europe Asia Holding & other Total Cash/Treasuries/Agencies 18,816 16,609 307 109 35,841 Investment grade corporates 42,060 5,345 3,630 - 51,034 High yield (and ot
Slide 24: Capital generation and excess capital
Capital and assumptions 24 Capital generation and excess capital Actual capital generation increased due to favorable markets • Capital generation excluding market impacts and one-time items of EUR 0.3 billion • Holding excess capital increased to EUR 1.5 billion driven by the issuance of EUR 500 mi
Slide 25: Capital allocated to run-off businesses
Capital and assumptions 25 Capital allocated to run-off businesses Continued reduction • Ambition to reduce capital allocated to run-off businesses by the end of 2018 of USD 1 bn from 2015 level • Current IFRS capital allocated to run-off businesses of USD 1.5 billion • Capital intensive run-off bus
Slide 26: Leverage and fixed charge coverage
Capital and assumptions 26 Leverage and fixed charge coverage Gross leverage • Gross financial leverage of 29.9% at high-end of (EUR billion, %) 26-30% target range 34% 33% 32% - Leverage ratio and debt increased due to issuance of 29% 30% 28% EUR 500 million senior notes - Proceeds of issuance is e
Slide 27: Updated Solvency II sensitivities
Capital and assumptions 27 Updated Solvency II sensitivities As of Q4 2016 Solvency II sensitivities • Upward interest rate shock scenario in the US (in percentage points) affected by impact from statutory hedge losses Scenario Group US NL UK on recognition of DTAs Capital markets • Review of loss a
Slide 28: Main economic assumptions
Capital and assumptions 28 Main economic assumptions Overall assumptions US NL UK Exchange rate against euro 1.10 n.a. 0.85 Annual gross equity market return (price appreciation + dividends) 8% 7% 7% Main assumptions for financial targets US NL UK 10-year government bond yields Develop in line with
Slide 29: Investing in Aegon
29 Investing in Aegon Aegon’s ordinary shares Ticker symbol AGN NA • Aegon ordinary shares ISIN NL0000303709 - Traded on Euronext Amsterdam since 1969 SEDOL 5927375NL and quoted in euros Trading Platform Euronext Amsterdam Country Netherlands • Aegon New York Registry Shares (NYRS) Aegon’s New York
Slide 30: Disclaimer
30 Disclaimer Cautionary note regarding non-IFRS measures This document includes the following non-IFRS financial measures: underlying earnings before tax, income tax, income before tax, market consistent value of new business and return on equity. These non-IFRS measures are calculated by consolida