Aegon Ltd. · EURONEXT:AGN
Aegon — Q2 2010 Earnings Presentation
32 slides from Aegon's earnings presentation, Aug 12, 2010
Slide 1: Second quarter 2010 results
Second quarter Alex Wynaendts CEO 2010 results Analyst & Investor presentation August 12, 2010
Slide 2: Key messages
Key messages Increase in underlying earnings and net income Strong sales and deposits, mainly driven by pensions Impairments at lowest level in two years Continued strong capital position 2
Slide 3: Execution of strategy demonstrated by strong results
Execution of strategy demonstrated by strong results Underlying earnings before tax New life sales (EUR million) (EUR million) 590 522 557 478 488 538 415 390 484 492 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Revenue-generating investments Gross deposits* (EUR billion) (EUR billion
Slide 4: Continued focus on execution of strategy in Q2
Continued focus on execution of strategy in Q2 Reallocate capital o Run-off institutional spread-based business in the US on track o Increased fee business, reduced spread business in the US o Capital preservations of EUR 250 million in Q2 2010 o Exploring strategic options for Transamerica Re, incl
Slide 5: Strong sales and deposits
Strong sales and deposits New life sales increased 22% YoY driven by almost all units, especially by increased sales in the US and the UK Gross deposits* up on strong US pensions and asset management Fixed annuities continued to be managed lower VNB declined due to earlier repricing of immed
Slide 6: Underlying earnings increase 26%
Underlying earnings increase 26% Americas earnings rose 47% due to higher fee and investment income as well as lower expenses; Q2 09 included several exceptional charges Strong earnings in the Netherlands; Q2 09 included a provision release Results in the UK rose due to increased annuity book
Slide 7: Operating expenses declined by 2% at constant currencies
Operating expenses declined by 2% at constant currencies Total operating expenses increased 3% due to dollar and pound sterling strengthening against the euro; however at constant currencies declined by 2% Operating expenses: – Americas decreased on a comparable basis as result of cost savings –
Slide 8: Net income driven by strong underlying earnings
Net income driven by strong underlying earnings Investment gains as a result of bond sales Impairments at lowest level in two years, approaching long-term assumptions Other charges impacted by one-time provision for settlement in the US Run-off businesses better than expected due to better p
Slide 9: Impairments at lowest level in two years
Impairments at lowest level in two years US impairments continued their downward trend, approaching AEGON’s long-term assumption of 30-35 bps Q2 2010 impairments are primarily related to US housing related securities Impairments expected to remain at somewhat elevated levels Impairments (EUR m
Slide 10: Excess capital lower due to higher S&P capital requirements
Excess capital lower due to higher S&P capital requirements Excess capital of EUR 3.0 billion above S&P’s AA capital adequacy requirements – EUR 1.9 billion in operating units (Q1: EUR 2.4 billion) – EUR 1.1 billion at the holding company (Q1: EUR 1.3 billion) Excess capital development Q2 2010 (E
Slide 11: Continued strong capital position
Continued strong capital position IGD capital surplus of EUR 7 billion; solvency ratio of ~200% Core capital* at 74% of total capital base – above threshold of 70%; managing to 75% over time Shareholders’ equity** (EUR billion) Total capital base 100% 18 90% Net senior debt 16 80% 14 70% Perpetu
Slide 12: Shareholders' equity continues to improve
Shareholders’ equity continues to improve Shareholders' equity rose 18% due to strengthening of the dollar, improvement in revaluation reserves and net income Shareholders’ equity per common share of EUR 8.83, up from EUR 7.28 in the previous quarter Positive revaluation reserves of EUR 0.6 bi
Slide 13: Limited exposure to peripheral European sovereigns reduced
Limited exposure to peripheral European sovereigns reduced EUR million * March 31, 2010 June 30, 2010 Portugal 59 47 Greece 108 70 Ireland 125 89 Italy 109 106 Spain 1,793 1,231 * At fair value 13
Slide 14: Conclusion
Conclusion Increase in underlying earnings and net income Strong sales and deposits, mainly driven by pensions Impairments at lowest level in two years Continued strong capital position 14
Slide 15: LIFEINSURANCE | PENSIONS [INVESTMENTS WEGON
LIFEINSURANCE | PENSIONS [INVESTMENTS WEGON
Slide 16: Upcoming AEGON events in 2010
Upcoming AEGON events in 2010 September November December Nomura Financial Services Q3 2010 results (CFO) Analyst and Investor Conference, Conference, London (CFO) November 11, 2010 New York City September 3, 2010 December 7-8, 2010 BoA-ML Financial Conference, Citigroup Speeddating, London (CEO) Lo
Slide 17: Appendix
Appendix "7 WEGON
Slide 18: Increased new life sales demonstrate continued strong franchise
Increased new life sales demonstrate continued strong franchise New life sales increased by 22% to EUR 590 million compared with Q2 2009 – Americas’ new life sales improved 13% mainly due to retail life sales – The Netherlands recorded higher pension and life sales – UK production increased 25% as
Slide 19: Continued strong deposits
Continued strong deposits Gross deposits of EUR 7.6 billion, an increase compared with Q2 2009 of 16% – Strong asset management, US pensions and US mutual funds deposits – Fixed annuities were managed lower All country units recorded net deposits*, in total EUR 1.0 billion Gross deposits Q2 2010
Slide 20: Value of new business
Value of new business Value of new business of EUR 148 million – Lower value of new business mainly due to the decrease of immediate annuity sales in the UK following earlier repricing and lower sales in Spain – Fixed annuity sales in the US are managed lower – New Markets represents 22% of the to
Slide 21: Americas
Americas Underlying earnings increased 47% to USD 560 million, mainly due to improved financial markets; Q2 09 included several one-off charges New life sales increased 13% mainly due to retail life Net deposits* of USD 1.0 billion as pension, VA and retail mutual fund inflows were partly offs
Slide 22: The Netherlands
The Netherlands Strong underlying earnings of EUR 97 million – Q2 2009 contained a one time release of EUR 20 million New life sales up 28% mainly due to increased pension sales Net deposits declined to EUR 55 million due to lower pension deposits Operating expenses declined 5% following con
Slide 23: United Kingdom
United Kingdom Underlying earnings increased to GBP 18 million New life sales increased 25% as higher pension and retirement sales more than offset lower immediate annuities sales following earlier repricing Net deposits were lower due to lower variable annuities sales Operating expenses dec
Slide 24: New Markets
New Markets Underlying earnings decreased as a result of storms and floods in Hungary and further investments in Asia and Turkey New life sales slightly declined as sales growth in both Central & Eastern Europe and Asia was offset by lower sales in Spain Net deposits rose due to improved asset
Slide 25: Run-off businesses better than expected
Run-off businesses better than expected Earnings better than expected due to better portfolio yields Institutional spread balances are running off as foreseen Run-off balances (USD billion) 45 40 35 Decline of USD 16.3bn 30 25 20 15 10 5 0 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Institutional
Slide 26: General account investments roll-forward
General account investments roll-forward EUR billion Americas The Netherlands United Kingdom New Markets Opening balance March 31, 2010 92.9 36.3 8.4 2.9 Net in- and outflow (0.4) (1.2) 0.3 0.0 Unrealized / realized results 1.5 0.0 0.1 (0.0) Foreign exchange 9.0 0.1 0.8 (0.0) Closing Balance June 30
Slide 27: Net impairments by asset class
Net impairments by asset class AEGON general account investments (in EUR millions) Q2 2010 impairments / recoveries by country unit - IFRS basis (pre-DAC, pre-tax) Americas NL UK New Markets Total ABS – Housing 19 - - - 19 ABS – Non-housing - - - - - CMBS 8 - - - 8 RMBS 57 - - - 57 Subtotal structur
Slide 28: Commercial mortgage loans
Commercial mortgage loans USD 13.6 billion commercial mortgage loan portfolio* Sound debt service coverage ratio of 1.8 Average LTV of 65% Own origination CML net impairments - IFRS (USD million)** Weighted average loan-to-value by property type (%) 80 70 60 50 40 30 32 23 16 20 10 0 Q4 09 Q
Slide 29: Annualized credit losses in the US decrease considerably
Annualized credit losses in the US decrease considerably In Q2 2010 US credit losses in bps of fixed income assets amounted to 10 bps a further decrease compared with 19 bps in Q1 2010 Annualized 1H 2010 credit impairments amount to 58 bps US credit losses in bps of fixed income assets 120 91 82
Slide 30: Life reinsurance
Life reinsurance Strong underlying earnings of USD 33 million New life sales stable 89% of premium income US domestic 20% new business market share in US traditional life reinsurance Leading position among life reinsurers: #3 in US and #7 globally Underlying earnings before tax New life sa
Slide 31: For questions please contact Investor Relations
For questions please contact Investor Relations T: +31 70 344 8305 E: [email protected] www.aegon.com P.O. Box 85 2501 CB The Hague The Netherlands
Slide 32: Disclaimer
Disclaimer Cautionary note regarding non-GAAP measures This press release includes certain non-GAAP financial measures: underlying earnings before tax and value of new business. The reconciliation of underlying earnings before tax to the most comparable IFRS measure is provided in Note 3 "Segment in