Aegon Ltd. · EURONEXT:AGN
Aegon — Q2 2014 Earnings Presentation
33 slides from Aegon's earnings presentation, Aug 14, 2014
Slide 1: Aegon delivers strong Q2 2014 Results
Aegon delivers strong Q2 2014 Results The Hague – August 14, 2014 Alex Wynaendts Darryl Button CEO CFO
Slide 2: Strong operational performance
Strong operational performance Earnings up on growth in the US, higher margins and investment income in NL and improved UK persistency partly offset by unfavorable US mortality and adverse currencies Higher sales driven by strong US deposits and accident & health production ► Record net deposits
Slide 3: Profitable sales translating into sustainable earnings growth
Profitable sales translating into sustainable earnings growth Continued strong profitable sales growth driven by customer focus, expanded distribution and innovation Strategic shift into fee-based business, supported by financial markets, resulting in higher asset balances ► Growth driven by var
Slide 4: Asset balances and earnings growth in US pensions and VA
Asset balances and earnings growth in US pensions and VA Successful growth of US pension business driven US pensions (Balances in USD bln & earnings in USD mln) by focus on retirement readiness and service 137 ► Increasing auto-enrollment & auto-escalation 108 ► Enhancing customer awareness throug
Slide 5: Investing efficiency improvements for continued growth
Investing efficiency improvements for continued growth Improving efficiency at all levels of the company Award winning UK Investing cost savings from improved efficiency platform Average policy size on into new initiatives to grow the business Platform double that of traditional book ► UK direct
Slide 6: Strong capital position and cash flows support interim dividend
Strong capital position and cash flows support interim dividend Operational free cash flows of EUR 370 million Key capital metrics ► Market impacts of EUR (25) million driven Q2 13 Q1 14 Q2 14 mostly by lower interest rates in the Americas Operational free cash flows* (€m) 366 305 319 ► One-time i
Slide 7: Execution of our strategy
Execution of our strategy Successful strategic partnership with Banco Santander in Spain extended to Portugal, giving Optimizing access to over 2 million customers through more than 600 branches our portfolio Acquisition of remaining 50% stake of on-line car insurance broker Onna-Onna Enhancing
Slide 8: Q2 2014 results appendix
Q2 2014 results Appendix continued For questions please contact Investor Relations +31 70 344 8305 [email protected] P.O. Box 85 2501 CB The Hague The Netherlands Download IR & Media App in the Appstore
Slide 9: Index
Index Press subject to go directly to the slides or continue with presentation 2Q14 2Q14 2Q14 2Q14 Strategy Financials Country Reconciliation support specific tables, assumptions & sensitivities Slide 10-13 Slide 14-23 Slide 24-27 Slide 28-31 9
Slide 10: Aegon at a glance
Aegon at a glance Underlying earnings before tax of EUR 1 billion in H1 2014 Over 150 12% 5% 4% Life years of Americas 5% Individual Savings and Retirement The Netherlands 23% 44% history 24% 59% United Kingdom Pensions New Markets Asset management 24% Other AA- financial Life insurance, pensions st
Slide 11: Sustainability ingrained in our strategy
Sustainability ingrained in our strategy Products and services A responsible approach Supporting local customers can trust to investments communities Clear and easy to understand Decisions guided by Aegon’s Long history of working products Responsible Investment with and investing in Value t
Slide 12: Investing in Aegon
Investing in Aegon Aegon’s ordinary shares Aegon ordinary shares Ticker symbol AGN NA ► Traded on Euronext Amsterdam since 1969 Underlying ISIN NL0000303709 SEDOL 5927375NL and quoted in euros Trading Platform Euronext Amsterdam Aegon New York Registry Shares (NYRS) Country Netherlands ► Traded
Slide 13: Progress towards 2015 targets
Progress towards 2015 targets € 498m 30-35% €€1.3-1.6 498m € 498m 7-10% € 498m 10-12% billion Fee-based earnings as % of Annual operational free cash Growth of underlying earnings Return on equity by 2015 Underlying earnings Underlying earnings Underlying earnings Underlying earnings underlying earn
Slide 14: Underlying earnings increased to EUR 514 million
Underlying earnings increased to EUR 514 million 2% higher earnings in the Americas as Underlying earnings before tax growth in variable annuity, mutual fund and pension balances, driven by both Americas The Netherlands markets and net inflows, more than (USD million) (EUR million) offset the impa
Slide 15: Strong net income in Q2 2014
Strong net income in Q2 2014 Fair value items mainly reflect hedging programs without accounting match in the US and NL, and model updates in NL Gains on investments mainly driven by selective de-risking in the UK and gains on equity investments in the US and NL Impairments on mortgages in CEE
Slide 16: Fair value items mainly impacted by hedge programs
Fair value items mainly impacted by hedge programs Total fair value items of EUR (263) million FV hedging with FV hedging without accounting match* accounting match FV investments FV other EUR (136) million EUR (119) million EUR 5 million EUR (13) million Derivatives ∆: EUR 646m Derivatives ∆: EUR (
Slide 17: Total sales up 5% on strong deposits and accident & health sales
Total sales up 5% on strong deposits and accident & health sales Gross deposits up 3% as strong pension and variable annuity sales in the US more than offset lower Aegon Asset Management deposits ► Net deposits excluding run-off up 75% to EUR 6.2 billion Higher US universal life production more
Slide 18: Gross deposits of EUR 13.0 billion
Gross deposits of EUR 13.0 billion Gross deposits in the Americas up 40% Gross deposits driven by growth in pensions and variable annuities Americas The Netherlands (USD billion) (EUR million) 81% growth in gross deposits in the Netherlands driven by inflows at on-line bank Knab 11.7 11.7 Plat
Slide 19: New life sales of EUR 511 million
New life sales of EUR 511 million New life sales in the Americas up 6% New life sales driven by higher universal life sales Americas The Netherlands New life sales decreased in the (USD million) (EUR million) Netherlands driven mostly by the continued shift from life insurance to bank savings pr
Slide 20: Strong MCVNB of EUR 221 million
Strong MCVNB of EUR 221 million Market consistent VNB (EUR million) 223 221 Americas strong on improvements in variable annuities 202 and universal life 1.6% 1.6% 1.4% Higher MCVNB in the Netherlands driven by increased mortgage production UK impacted by lower pensions margins from auto- Q2 13
Slide 21: Solid operational free cash flows and holding excess capital
Solid operational free cash flows and holding excess capital Operational free cash flows of EUR 370 million ► Market impacts of EUR (25) million driven mostly by lower interest rates in the Americas ► One-time items of EUR 76 million due mostly to executed reserve financing solution in the America
Slide 22: Solid group and local capital positions
Solid group and local capital positions Group IGD solvency ratio stable at 211% as the benefit of earnings and the reserve financing solution in the US was offset mostly by the payment of dividends Excess capital in the United States of USD ~800 million as the benefit of reserve financing and ea
Slide 23: Capital allocated to run-off businesses
Capital allocated to run-off businesses Current capital allocated to run-off businesses of USD 2.1 billion ► Return on capital of run-off businesses of 2.3% year to date Capital intensive run-off businesses negatively impact return on equity ► Capital allocated to run-off businesses included in
Slide 24: Americas
Americas Higher earnings as growth in VA, pension Underlying earnings Operating expenses and mutual fund balances partly offset by before tax (USD million) (USD million) unfavorable mortality and lower FA earnings Operating expenses 1% higher mainly driven by business growth 454 469 453 471 Ne
Slide 25: The Netherlands
The Netherlands Earnings increased 29% due mostly to Underlying earnings Operating expenses improvements in Non-life, higher before tax (EUR million) (EUR million) investment income and improved margins on savings Operating expenses increased 8% driven by a reclassification of expenses and highe
Slide 26: United Kingdom
United Kingdom Higher earnings driven by improved Underlying earnings Operating expenses persistency before tax (GBP million) (GBP million) Operating expenses declined 20% due mostly to lower investments in technology and business transformation 26 costs 22 97 20 77 77 Group pensions sales slo
Slide 27: New Markets
New Markets Earnings increased 27% due mostly to Underlying earnings Operating expenses higher earnings in CEE on improved non- before tax (EUR million) (EUR million) life results in Hungary and growth in Asia Slightly higher operating expenses driven by growth in Asia and Spain 61 62 161 156 16
Slide 28: Reconciliation of effective tax rate Q2 2014
Reconciliation of effective tax rate Q2 2014 Reconciliation of effective tax rate Q2 2014 New Markets/ EUR million Americas The Netherlands United Kingdom Total Holdings Income before tax 268 39 117 8 432 Nominal tax rate 35.0% (91) 25.0% (10) 21.5% (25) N/A 0 (126) Actual income tax (51) (7) (27) (
Slide 29: General account investments roll-forward
General account investments roll-forward General account investment roll-forward New Markets & EUR billion Americas The Netherlands United Kingdom Other Opening balance March 31, 2014 77.2 46.7 11.0 3.7 Net in- and outflow (1.2) 0.9 0.3 0.3 Unrealized / realized results 1.3 0.8 0.1 0.1 Foreign excha
Slide 30: Main economic assumptions
Main economic assumptions Main US economic assumptions 10-year US Treasury assumed to grade over ten years to 4.25% Credit spreads are assumed to grade over two years to 110 bps Bond funds are assumed to return 4% for 10 years and 6% thereafter Money market rates are assumed to remain flat a
Slide 31: Earnings sensitivities to equity markets and reinvestment yields
Earnings sensitivities to equity markets and reinvestment yields Protection of capital position main purpose of Macro hedge equity sensitivity estimates for Q3 2014 macro hedging program Total equity return Fair value items in quarter impact IFRS accounting mismatch between hedges and -8% ~USD (
Slide 32: Upcoming events
Upcoming events September October Morgan Stanley BofA Merrill Lynch Corporate Day Financial Conference Dublin London September 4, 2014 1-2 October, 2014 Barclays Financial Services Conference November New York Q3 results September 8, 2014 November 13, 2014 ING Benelux Conference London September 10,
Slide 33: Disclaimer
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 and market consistent value of new business. These non-IFRS measures are calculated by consolidating on a proportiona