Aegon Ltd. · EURONEXT:AGN
Aegon — H2 2019 Earnings Presentation
35 slides from Aegon's earnings presentation, Feb 13, 2020
Slide 1: 2H19 Results
2H19 Results Alex Wynaendts CEO Matt Rider CFO February 13, 2020 Helping people achieve a lifetime of financial security
Slide 2: Continued focus on growth and capital in 2019
Continued focus on growth and capital in 2019 Low interest rates impacted return on equity. Outflows in US retirement and annuity businesses Commercial momentum improved. Increase in life and accident & health sales, gross deposits Strong normalized capital generation; dividend increased by 7% Relea
Slide 3: Progress on 2019 – 2021 targets
Progress on 2019 – 2021 targets Target delivery in 2019 Targets 2019 - 2021 Results FY 2019 EUR 4.1 billion EUR 1.6 billion Normalized capital generation1 cumulative for 2019 – 2021 +12% vs 2018 Dividend pay-out ratio 41% 45 – 55 % Of normalized capital generation1, 2 DPS up 7% vs. 2018 Return on eq
Slide 4: Dividend increases by 7%
Dividend increases by 7% Normalized capital generation increased in 2019 • Full year dividend for 2019 increased by 2 cents to EUR 0.31 per common share - Dividend decisions take into account normalized capital, capital position and holding excess cash • Strong normalized capital generation in 2019
Slide 5: Significant progress in all parts of the portfolio
Significant progress in all parts of the portfolio Portfolio actions 2H19 by strategic category Underlying earnings before tax (in EUR million, 2H19) Manage for Value Drive for Growth • NL Life: Completed a longevity • AM: Eighth consecutive full year of positive external reinsurance deal for approx
Slide 6: Higher gross deposits, net outflows in the US
Higher gross deposits, net outflows in the US Deposits Gross deposits Net deposits (in EUR billion) (in EUR billion) 79 (13) 66 64 65 4 57 11 47 8 (22) 32 33 (3) 37 27 (9) 3 3 3 4 (1) (2) 12 10 (7) (3) 13 12 13 (8) (27) (26) 16 20 18 22 19 2H17 1H18 2H18 1H19 2H19 2H17 1H18 2H18 1H19 2H19 • AM: Incr
Slide 7: Life and protection sales gaining momentum
Life and protection sales gaining momentum Insurance sales development New life sales New business in A&H and P&C (APE, in EUR million) (New premium production, in EUR million) 456 354 427 422 404 4 398 64 68 65 70 273 52 67 4 141 173 81 140 138 137 182 177 155 5 4 282 3 90 87 76 221 212 208 219 188
Slide 8: Improved commercial momentum while investing in customer services
Improved commercial momentum while investing in customer services US Workplace Solutions Customer centricity Commercial momentum Retirement Plan tNPS scores Advice Center assets 5,6 53 (USD billion) 49 4,2 3,8 3,3 23 2,1 17 1H18 2H18 1H19 2H19 Workplace 2015 2016 2017 2018 2019 • Maintained strong t
Slide 9: Improved commercial momentum while investing in customer services
Improved commercial momentum while investing in customer services US Individual Solutions Customer centricity Commercial momentum in strategic products Market shares1 • Investing in wholesale relationships and launching new products through the TCS platform in 2020 6.3% 6.0% • Fixed Indexed Annuity
Slide 10: Successfully leveraging technology across Aegon
Successfully leveraging technology across Aegon 1 Automation 2 Simplification 3 Cloud Adoption Increase throughput and productivity Cost optimization and leverage scale Scale, speed and future readiness Asset Management and UK Procurement Shared IT services Leveraged robotics Technology-related Are
Slide 11: Taking our responsibility as investor and asset manager
Taking our responsibility as investor and asset manager € 147 billion General account ESG at the heart of our asset management business Exclusions1 Coal Companies that expand coal-related operations or exceed revenue threshold2 EUR 9 billion ESG and impact investments AuM as Tobacco companies Compan
Slide 12: 2H19 Financials
2H19 Financials 12
Slide 13: Financial highlights
Financial highlights IFRS 2H19 Capital position FY19 capital generation year-end 2019 and dividend Capital generation1 Underlying earnings Group solvency ratio EUR 1,569 million EUR 963 million 201% +12% compared with 2018 -5% compared with 2H18 +4pp compared with 1H19 Net income Holding excess cash
Slide 14: Underlying earnings impacted by adverse market movements; earnings growth outside the US
Underlying earnings impacted by adverse market movements; earnings growth outside the US Underlying earnings before tax (UEBT) (in EUR million) • US Life earnings decreased mainly because of negative impact from lower interest rates, tighter credit spreads and portfolio updates on intangibles. UEBT
Slide 15: Net income amounts to EUR 910 million
Net income amounts to EUR 910 million Underlying earnings to net income in 2H19 Fair value items (in EUR million) • Positive real estate revaluations in the US and the Netherlands, and gains on the guarantee provision and interest rate hedges in NL UEBT 2H19 963 Realized gains • Primarily gains in t
Slide 16: Maintained strong capital position
Maintained strong capital position Focus on sustainably growing capital generation in challenging environment • Interest rate fluctuations have limited impact on the Group’s Solvency II ratio, reflecting extensive interest rate hedging. However, interest rates have an impact on capital generation •
Slide 17: Group Solvency II ratio increases to 201%
Group Solvency II ratio increases to 201% OF and SCR development (in EUR billion) • Expected return (+10%) reflects strong business performance SII 197% +10% -4% +2% -5% +1% 201% • Capital return (-4%) primarily driven by external dividends to shareholders (0.4) (0.3) 0,7 0.0 18,5 • Market variances
Slide 18: Solid capital position for all main units
Solid capital position for all main units Local solvency ratio by unit 2H 2019 470% • Estimated RBC ratio remained far above the bottom-end of the target range of 350% • Positive impacts from management actions such as the merger of TALIC and TLIC1 1H 2019 472% US • Management actions offset by expe
Slide 19: Well diversified remittances and capital generation
Well diversified remittances and capital generation Capital generation and gross remittances (2019, in EUR million) Normalized Gross Region capital remittances generation1 Americas 1,110 809 • Normalized capital generation and remittances Netherlands 470 - from United States remained strong United K
Slide 20: Holding excess cash within the target range
Holding excess cash within the target range Holding excess cash development in 2H 2019 • The group received EUR 595 million gross remittances from subsidiaries, while Aegon the Netherlands retained its planned remittances in 2H19 and – following management actions – remitted EUR 100 million in Febru
Slide 21: EUR 1.4bn remittance guidance underscores fungibility and ensures financial flexibility
EUR 1.4bn remittance guidance underscores fungibility and ensures financial flexibility Holding excess cash movements 2020 • EUR 1.4 billion guidance for gross Holding excess cash movements remittances in 2020 (2020, in EUR billion) • Gross remittances include proceeds of ~1.4 EUR 153 million from d
Slide 22: Delivering increasing returns to shareholders
Delivering increasing returns to shareholders EUR 0.31 EUR 1.4 billion 41 % DPS gross remittances Dividend pay-out +7% vs. 2018 EUR 1.5 billion including sale of Dividend pay-out ratio of stake in Japanese JVs1 normalized capital generation 1. Sale of Japanese JVs was announced on May 17th, 2019 and
Slide 23: Appendix
Appendix For questions please contact Investor Relations +31 70 344 8305 [email protected] P.O. Box 85 2501 CB The Hague The Netherlands Helping people achieve a lifetime of financial security
Slide 24: Aegon Investor Relations
Aegon Investor Relations Stay in touch Upcoming events 2020 Contact Investor Relations Jan Willem Weidema +31 70 344 8028 2H roadshow, London February 18 Head of Investor Relations Karl-Otto Grosse-Holz +31 70 344 7857 Investor Relations Officer 2H roadshow, Frankfurt February 20 Hielke Hielkema +31
Slide 25: An overview of who we are
An overview of who we are Earnings What we do (Underlying earnings before tax, full year 2019) Life insurance, pensions & asset management for almost 30 million customers 3% (2019) 6% History Our roots date back 175 years Paid out €54 billion in claims, benefits and plan withdrawals (Full year 2018)
Slide 26: Elevated normalized capital generation despite continued investment in new businesses
Elevated normalized capital generation despite continued investment in new businesses Key portfolio metrics • Strong normalized capital generation in 2019 reflecting positive experience variance and higher release of required capital • Investing the vast majority of new business strain in Drive for
Slide 27: Leverage ratio remains within target range of 26 – 30%
Leverage ratio remains within target range of 26 – 30% Gross financial leverage ratio (in %) • Gross financial leverage ratio at 2H19 within target zone 32,2% • Slight decrease in leverage ratio in 2019 - Positive impact of retained earnings and debt 30,7% reduction 29,3% - Negative impact from mark
Slide 28: Well-managed capital sensitivities
1H 2018 Results Well-managed capital sensitivities Solvency II sensitivities (in percentage points, 2H 2019) Scenario Group NL UK US US RBC Equity markets +25% +12% +2% 0% +33% +42% Equity markets -25% -12% -7% -4% -27% -28% Interest rates +50 bps +4% -2% +2% +13% +19% Interest rates -50 bps -4% +2%
Slide 29: Conversion of RBC to Solvency II
Conversion of RBC to Solvency II Next review in 2H20 • Conversion methodology for US operations has been agreed with DNB, to be reviewed annually • Calibration of US insurance entities followed by subsequent adjustment for US debt and Holding items - Calibration of US insurance entities is consisten
Slide 30: Long Term Care continues to develop in line with expectations
Long Term Care continues to develop in line with expectations LTC actual versus expected claims ratio (in %, in USD million, closed block) • IFRS assumptions are reviewed in detail annually; management monitors monthly emerging 140% 80 experience 130% 60 • IFRS results are the leading indicator – mo
Slide 31: LTC management actions support reserve sufficiency
LTC management actions support reserve sufficiency LTC reserves (in USD billion, at December 31, 2019) 10.6 1.1 2.3 1.3 6.4 6.1 Adequacy of statutory reserves supported by management actions 3 0.5 Management actions 5.9 IFRS reserves NPV rate Investment Reinsurance 2 IFRS Statutory excl. mgmt action
Slide 32: General account investments
General account investments December 31, 2019 amounts in EUR millions, except for the impairment data Americas Europe Asia Holdings & other Total Cash/Treasuries/Agencies 13,612 16,811 460 183 31,066 Investment grade corporates 34,872 5,933 4,582 3 45,390 High yield (and other ) corporates 2,021 44
Slide 33: Main economic assumptions
Main economic assumptions Overall assumptions US NL UK Exchange rate against euro 1.15 n.a. 0.88 Annual gross equity market return (price appreciation + dividends) 8% 6.5% 6.5% Main assumptions for financial targets US 10-year government bond yields Grade to 4.25% in 10 years time NL 10-year governm
Slide 34: Investing in Aegon
Investing in Aegon Aegon’s ordinary shares Ticker symbol AGN NA ISIN NL0000303709 • Aegon ordinary shares SEDOL 5927375NL Trading Platform Euronext Amsterdam - Traded on Euronext Amsterdam since 1969 Country Netherlands and quoted in euros Aegon’s New York Registry Shares • Aegon New York Registry S
Slide 35: Disclaimer
Disclaimer Cautionary note regarding non-IFRS-EU measures This document includes the following non-IFRS-EU financial measures: underlying earnings before tax, income tax, income before tax, market consistent value of new business and return on equity. These non-IFRS-EU measures are calculated by con