Aegon Ltd. · EURONEXT:AGN
Aegon — H2 2020 Earnings Presentation
27 slides from Aegon's earnings presentation, Feb 11, 2021
Slide 1: 2H 2020 results
2H 2020 results Lard Friese CEO Matt Rider CFO February 11, 2021 Helping people achieve a lifetime of financial security
Slide 2: Financial results
Financial results Underlying earnings Net income1 Group Free Cash Flows Dividend per share before tax1 Solvency II ratio 2H20: EUR 1,029m 2H20: EUR (147)m 2H20: 196% FY20: EUR 530m FY20: EUR 0.12 2H19: EUR 961m 2H19: EUR 908m 1H20: 195% FY19: EUR 923m FY19: EUR 0.15 • Higher equity markets • Net los
Slide 3: Improving operational performance
Improving operational performance • Good progress on the implementation of the Number of initiatives >1,100 performance improvement initiatives >1,100 >1,100 • As of YE 2020, 23% of all planned initiatives Growth already passed through implementation stage, initiatives Initiative expected to contrib
Slide 4: Building on our strengths in Strategic Assets
Building on our strengths in Strategic Assets US NL UK Individual Life sales Mortgage production Net deposits retail (in USD million) (in EUR billion) (in GBP billion) 173 5.6 5.5 170 160 142 4.2 (0.4) 3.2 (0.7) (1.0) (1.0) 1H19 2H19 1H20 2H20 1H19 2H19 1H20 2H20 1H19 2H19 1H20 2H20 Retirement Plans
Slide 5: Growing in Asset Management; developing our businesses in Growth Markets
Growing in Asset Management; developing our businesses in Growth Markets Asset Growth Markets Management1 (Brazil, China2, Spain & Portugal) Underlying earnings before tax Underlying earnings before tax (in EUR million) (in EUR million) 111 45 79 71 34 37 37 60 1H19 2H19 1H20 2H20 1H19 2H19 1H20 2H2
Slide 6: Progress on Financial Assets and reducing risk profile
Progress on Financial Assets and reducing risk profile Risk and balance sheet ✓ 25% of the interest rate management plan has been implemented in 2020 management ✓ Establishing dedicated teams to manage Financial Assets US Variable Annuities US Long-Term Care NL Life book >95% hedge effectiveness LTC
Slide 7: Progress on capital allocation
Progress on capital allocation Business Decisions taken • Divestment for EUR 830 million Central & • Hungary • Poland Eastern • Valuation at 2.6x P/B and 15x net underlying earnings Europe • Turkey • Romania • Closing expected in 2H 2021 • Divestment for approx. GBP 60 million • Stonebridge, UK • Cl
Slide 8: Our priorities for 2021
Our priorities for 2021 Improving operational • Maintain momentum on execution of performance improvement initiatives performance • Reduce expenses and invest in business to grow customer base and expand margins • Active management of Financial Assets as well as smaller and niche operations Value-cr
Slide 9: 2H 2020 Results
2H 2020 Results EGON
Slide 10: Underlying earnings increase by 7% to EUR 1,029 million
Underlying earnings increase by 7% to EUR 1,029 million Underlying earnings before tax1 (in EUR million) Expense savings UEBT 2H 2019 961 • Operating expense reduction in all units, including lower employee benefit expenses from change in pension Americas 8 arrangement in the Netherlands Americas Th
Slide 11: Net loss of EUR 147 million driven by fair value items
Net loss of EUR 147 million driven by fair value items Net income1 (2H 2020, in EUR million) Fair value items • EUR 1,330 million loss in the Netherlands, mainly due to Underlying earnings 1,029 an increase of the value of liabilities as a result of tightening credit spreads, reversing a similar gai
Slide 12: Free Cash Flows used for dividend and deleveraging
Free Cash Flows used for dividend and deleveraging Cash Capital at Holding 2H 2020 (in EUR million) 1H 2020 • Free Cash Flows for FY 2020 Free Cash Flows used for capital return to EUR 530 million shareholders and repayment of senior debt in December 2020 827 153 275 • EUR 275 million gross (297) re
Slide 13: Capital position of main units above the operating level
Capital position of main units above the operating level RBC ratio Solvency II ratio Solvency II ratio US, regulated entities NL, Aegon Levensverzekering N.V. UK, Scottish Equitable plc +25%-pts -15%-pts +11%-pts 432% 174% 407% Operating level 159% 400% Operating level 156% Operating level 150% 145%
Slide 14: Group Solvency II ratio amounts to 196%
Group Solvency II ratio amounts to 196% Own funds (OF) and Solvency Capital Requirement (SCR) development (in EUR billion) • Strong contribution from normalized SII 195% +10% -3% -3% -1% -2% 196% capital generation • Capital return includes impact of 18.6 proposed final dividend 2020 0.2 0.7 • Manag
Slide 15: Final dividend of EUR 0.06 per share
Final dividend of EUR 0.06 per share Dividend per common share (in EUR) • EUR 0.06 per share final dividend to be proposed to the AGM1 Around 0.25 • Policy is to distribute Free Cash Flows to shareholders, unless invested in value-creating opportunities subject to strict financial and non-financial
Slide 16: Concluding remarks
Concluding remarks EGON
Slide 17: Key messages
Clear strategic • Increased strategic focus through divestments, closure or right-sizing of focus, building smaller and niche operations on our strengths • Building on our strengths in Strategic Assets and Asset Management • Setting up dedicated teams to manage Financial Assets in US and NL Value- c
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 Helping people achieve a lifetime of financial security
Slide 19: Well-managed capital sensitivities
Well-managed capital sensitivities Solvency II sensitivities (in percentage points, 2020) Scenario Group NL Life4 UK SE plc5 US US RBC Equity markets +25% +7% +1% -1% +20% +23% Equity markets -25% -11% -5% -5% -29% -34% Interest rates +50 bps +1% -8% +1% +4% +5% Interest rates -50 bps -0% 9% -1% -3%
Slide 20: Credit losses in 2020 in line with long-term average
Credit losses in 2020 in line with long-term average Impairments on US general account fixed income assets (in bps) 120 91 82 64 48 52 37 33 27 25 17 17 17 19 Average 23 9 8 8 1 2 4 2 1 3 1 -6 -2 -2 -3 -9 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Slide 21: Conversion of RBC to Solvency II
Conversion of RBC to Solvency II • Conversion methodology for US operations has been agreed with DNB, subject to regular review • Calibration of US insurance entities followed by subsequent adjustment for US debt and holding items - Calibration of US insurance entities is consistent with EIOPA’s gui
Slide 22: Capital generation and remittances
Capital generation and remittances (in EUR million) Normalized capital generation1 Gross remittances Region 1H 2019 2H 2019 1H 2020 2H 2020 1H 2019 2H 2019 1H 2020 2H 2020 Americas 519 591 230 540 402 406 423 42 Netherlands 202 268 182 165 - - 100 75 United Kingdom 42 40 77 83 179 72 - 39 Internatio
Slide 23: Leverage ratio benefits from debt reduction in 2020
Leverage ratio benefits from debt reduction in 2020 Gross financial leverage Gross financial leverage ratio (in EUR billion) (in %) 7.4 32.2% 7.0 6.7 6.7 30.7% Senior 2.4 6.0 2.3 1.8 1.7 1.2 29.2% 28.6% 27.9% Hybrid 5.0 4.7 4.9 4.9 4.7 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 23
Slide 24: Main economic assumptions
Main economic assumptions Overall assumptions US NL UK Exchange rate against euro 1.2 n.a. 0.9 2021: 2% 2021: 4% 2021: 4% Annual gross equity market return (price appreciation + dividends) 2022 onwards 8% 2022 onwards 6.5% 2022 onwards 6.5% Main assumptions for financial targets US 10-year governmen
Slide 25: Aegon Investor Relations
Aegon Investor Relations Stay in touch Upcoming events 2021 Contact Investor Relations Morgan Stanley Virtual European Jan Willem Weidema March 18 +31 70 344 8028 Financials Conference Head of Investor Relations Karl-Otto Grosse-Holz +31 70 344 7857 HSBC Virtual US West Coast Investor Relations Offi
Slide 26: Investing in Aegon
Investing in Aegon Aegon ordinary shares Aegon New York Registry Shares (NYRS) • Traded on Euronext Amsterdam • Traded on NYSE since 1991 and since 1969 and quoted in euros quoted in US dollars • One Aegon NYRS equals one Aegon Amsterdam-listed common share • Cost effective way to hold international
Slide 27: 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