Aegon Ltd. · EURONEXT:AGN
Aegon — Q2 2013 Earnings Presentation
31 slides from Aegon's earnings presentation, Aug 8, 2013
Slide 1: Q2 2013 Results
Q2 2013 Results The Hague – August 8, 2013 Alex Wynaendts Darryl Button CEO CFO aegon.com
Slide 2: Key messages
Key messages Executing on strategic transformation Continued positive sales trend in accumulation and At-Retirement products Strong underlying earnings result of business growth and favorable equity markets Continued strong capital position and cash flows – interim dividend of EUR 0.11 Earni
Slide 3: Positive sales trend continues – reflecting our strategic focus
Positive sales trend continues – reflecting our strategic focus New life sales increased 21% to EUR 520 million ► New life sales in NL more than doubled due to strong competitive position and increasing market demand for pensions ► UK sales 38% higher, benefiting from auto enrollment, strong group
Slide 4: Growth underpinned by distribution, innovation and leveraging technology
Growth underpinned by distribution, innovation and leveraging technology ► New US VA partnership with Edward Jones and earlier announced agreement with Voya (ING U.S.) New distribution ► Selected by Mercer as one of three partners in the large DC market and sole partner for SME in the UK agreements
Slide 5: Successful transition from spread to fee-based business
Successful transition from spread to fee-based business Higher earnings of US variable annuities and retail mutual funds more Underlying earnings than compensating decrease in fixed annuities (USD million) 175 170 172 154 ► Successful delivery on strategy to shift from spread to fee-based business
Slide 6: Growing value of new businesses
Growing value of new businesses Market consistent value of new business in the Americas doubled ► VA benefited from continued sales momentum and higher interest rates ► Life up on repricing and redesign of products Market consistent VNB (EUR million) In the Netherlands value of new business incr
Slide 7: UK transformation to low-cost platform player
UK transformation to low-cost platform player At-Retirement Workplace Savings Non-Advised Accumulation and decumulation “Gated” solutions for employee Self-service availability for the D.I.Y. capability for the adviser market segments market Launched November 2011 Launched June 2012 To be launched t
Slide 8: Underlying earnings up on business growth and favorable equity markets
Underlying earnings up on business growth and favorable equity markets Americas up on both pension and variable annuities partly offset by higher sales related expenses resulting from strong sales Netherlands stable, higher earnings in Life & Savings were offset by lower earnings in Pensions U
Slide 9: Net income impacted by fair value items
Net income impacted by fair value items Fair value items impacted by hedging losses in US and swaps on perpetuals and the higher valuation of medium term notes due to credit spread movements at the holding Gains on investments are the result of normal trading and asset-liability management Low
Slide 10: Fair value items impacted by rising equity market and interest rates
Fair value items impacted by rising equity market and interest rates Total fair value items of EUR (270) million FV hedging with FV hedging without FV investments FV other accounting match accounting match EUR (75) million EUR 20 million EUR (152) million EUR (63) million Derivatives ∆: EUR (757)m D
Slide 11: Operating expenses up on sales related expenses and investments
Operating expenses up on sales related expenses and investments Total operating expenses excluding UK business transformation costs were 3% higher Expenses in the Americas up on higher sales related expenses following strong growth Operating expenses in the Netherlands declined driven by reali
Slide 12: Continued strong operational free cash flows
Continued strong operational free cash flows Operational free cash flows of EUR 674 million ► Market impacts of EUR 324 million driven by rising interest rates ► One-time items of EUR (16) million Operational free cash flow development (EUR million) EUR million Q2 12 Q1 13 Q2 13 Earnings on in-for
Slide 13: Solid group and local capital positions
Solid group and local capital positions Group IGD ratio of 220%, reflecting strong operating unit regulatory capital positions ► US RBC ratio of ~465%; NL IGD ratio of ~270% (incl. UFR and bank); UK Pillar 1 ratio of ~170% Cash flow generation in US and positive impact of higher interest rates o
Slide 14: Holding excess capital remains strong
Holding excess capital remains strong Holding excess capital increased to EUR 1.9 billion ► Cash used for the preferred share transaction, external dividends and investment in partnership with Santander offset by dividends from business units and proceeds from Unnim divestment Gross financial le
Slide 15: Dividend growth supported by strong capital and cash flows
Dividend growth supported by strong capital and cash flows Interim 2013 dividend increased to EUR 0.11 per share Dividends will be paid in cash or stock at the election of the shareholder Repurchase of interim 2013 stock dividend; eliminating dilutive impact and increasing cash commitment Ai
Slide 16: Key messages
Key messages Executing on strategic transformation Continued positive sales trend in accumulation and At-Retirement products Strong underlying earnings result of business growth and favorable equity markets Continued strong capital position and cash flows – interim dividend of EUR 0.11 Earni
Slide 17: Upcoming events
Upcoming events September November Barclays Global Q3 2013 results Financial Services November 7, 2013 Conference, New York September 9, 2013 ING Benelux Conference, London September 12, 2013 KBW European Financials Conference, London September 17, 2013 BoA-ML Conference, Download London IR & Media
Slide 18: Appendix
Appendix 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 19: New life sales of EUR 520 million
New life sales of EUR 520 million New life sales in the Americas were flat as higher traditional term life sales were offset by lower universal life sales due to re-pricing to improve MCVNB New life sales in the Netherlands more than doubled due to higher pension sales resulting from a strong co
Slide 20: Variable annuities and retail mutual funds drive strong gross deposits
Variable annuities and retail mutual funds drive strong gross deposits US variable annuity deposits increased 73% as competitors withdraw from market Retail mutual fund deposits increased 51% Strong retirement plan deposits driven mainly by successful efforts to increase inflows from existing
Slide 21: Market consistent value of new business of EUR 202 million
Market consistent value of new business of EUR 202 million MCVNB for the Americas increased due to variable annuity sales growth and higher interest rates MCVNB in the Netherlands up on higher contributions from mortgages and increased pensions production MCVNB in the UK lower as higher pensio
Slide 22: Underlying earnings increased to EUR 478 million
Underlying earnings increased to EUR 478 million Americas’ earnings growth driven by higher fee revenues due to higher variable annuity and pension account balances Stable underlying earnings in the Netherlands as the benefit of favorable funding rates for mortgages was offset by adverse claims
Slide 23: Americas
Americas Underlying earnings increased as higher variable annuity and pension account balances led to higher fee revenues and due to lower variable annuity reserves due to favorable markets Operating expenses increased as higher sales costs more than offset cost reduction initiatives New life
Slide 24: The Netherlands
The Netherlands Stable underlying earnings as the benefit from lower funding costs for mortgages due to lower rates was offset by adverse claims experience in pensions and non-life Operating expenses decreased as a result of the successful implementation of the cost reduction program Sales gro
Slide 25: United Kingdom
United Kingdom Underlying earnings increased due to favorable mortality and claims experience in the Life segment; Pension earnings were flat as the benefit from higher equity markets offset the negative impact of continued adverse persistency Higher operating expenses driven mostly by the closi
Slide 26: New Markets
New Markets Underlying earnings declined mainly as a consequence of lower earnings in Hungary due to higher non-life claims and the insurance tax, and divestments in Spain Operating expenses increased as the result of the Hungarian insurance tax, Asset Management, Asia and VA Europe driven by in
Slide 27: Capital allocated to run-off businesses
Capital allocated to run-off businesses Current capital allocated to run-off businesses of USD 2.4 billion ► Return on capital of run-off businesses of 1.8% year to date Capital intensive run-off businesses negatively impact return on equity ► Capital allocated to run-off businesses is included
Slide 28: General account investments roll-forward
General account investments roll-forward General account investment roll-forward EUR billion Americas The Netherlands United Kingdom New Markets & Other Opening balance March 31, 2013 86.8 43.8 11.0 4.1 Net in- and outflow (0.6) 0.8 0.1 (0.4) Unrealized / realized results (2.6) (0.6) (0.5) (0.1) For
Slide 29: Reconciliation of effective tax rate Q2 2013
Reconciliation of effective tax rate Q2 2013 Reconciliation of effective tax rate Q2 2013 EUR million Americas The Netherlands United Kingdom New Markets/ Holdings Total Income before tax 224 20 (12) 41 273 Nominal tax rate 35.0% (78) 25.0% (5) 24.5% 3 NM (11) (91) Actual income tax (53) (1) 8 16 (3
Slide 30: Main economic assumptions
Main economic assumptions Main US economic assumptions 10-year US Treasury assumption of 4.75% Credit spreads are assumed to grade down over two years to 110 bps Bond funds are assumed to return 4% for 5 years and 6% thereafter Money market rates are assumed to remain flat at 0.1% for two ye
Slide 31: Disclaimer
Disclaimer Cautionary note regarding non-IFRS measures This document includes the 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 proportionate basis A