Aegon Ltd. · EURONEXT:AGN
Aegon — Q4 2014 Earnings Presentation
35 slides from Aegon's earnings presentation, Feb 19, 2015
Slide 1: Aegon delivers strong Q4 2014 Results
Aegon delivers strong Q4 2014 Results The Hague – February 19, 2015 Alex Wynaendts Darryl Button CEO CFO
Slide 2: Continued successful execution of our strategy
Continued successful execution of our strategy Optimize Operational Customer portfolio excellence loyalty Divested non-core businesses: Improved customer retention in Knab reaches EUR 1 billion Canada, France, Badajoz JV the US following creation of I&R AuM and 50,000 customers Expanding dis
Slide 3: Higher earnings and sales driven by strong operational performance
Higher earnings and sales driven by strong operational performance Higher underlying earnings supported by continued solid business performance Sales growth across the group; new business profitability strong despite low interest rates Strong operational free cash flows and solid capital posit
Slide 4: 22% sales growth driven by continued strong deposits
22% sales growth driven by continued strong deposits Strong gross deposits of EUR 13.7 billion driven by US variable annuities and pensions, and third-party asset management flows; net deposits* of EUR 2.6 billion Higher life sales mainly due to stronger universal life production in US and Asia;
Slide 5: Growth of fee-based businesses continues
Growth of fee-based businesses continues Americas gross deposits of USD 9.7 billion result of continued growth of fee business ► Variable annuity deposits up 23% to USD 2.8 billion; net deposits of USD 1.7 billion ► Retirement plan deposits of USD 5.3 billion; net deposits of USD 0.6 billion ► Rec
Slide 6: Capital position remains solid as focus turns fully towards Solvency II
Capital position remains solid as focus turns fully towards Solvency II Group IGD solvency ratio of 208% and solid local capital positions Group Holding excess capital of EUR 1.2 billion following EUR 500 million IGD ratio of 208% senior debt redemption European operations fully focused on Sol
Slide 7: Leverage and fixed charge coverage targets achieved in 2014
Leverage and fixed charge coverage targets achieved in 2014 Gross financial leverage of 28.7% Gross leverage within 26-30% target range (EUR billion, %) 34.0% 33.3% ► Leverage cut by ~25% since 2011 32.0% 28.7% ► No equity credit taken for perpetual capital securities 9.2 8.7 7.7 7.1 2011 2012 201
Slide 8: Sustainable dividend growth
Sustainable dividend growth Proposed final 2014 dividend of EUR 0.12 per share, total 2014 dividend of EUR 0.23 per share Continue to neutralize stock dividends to avoid dilution Future dividend growth dependent on strong capital position and cash flows Free cash flows Increasing dividends** (
Slide 9: Key messages
Key messages Higher earnings and profitable sales despite continued low interest rates Q4 results Continued sales momentum throughout group reflects strong fundamentals Strong normalized operational free cash flows Dividend increased to EUR 0.23 per share supported by cash flows Capital and
Slide 10: Appendix continued Q4 2014 results
Appendix continued Q4 2014 results For questions please contact Investor Relations +31 70 344 8305 [email protected] P.O. Box 85 2501 CB The Hague The Netherlands
Slide 11: Index
Index Press subject to go directly to the slides or continue with presentation 4Q14 4Q14 4Q14 4Q14 Strategy Financials Country Reconciliation support specific tables, assumptions & sensitivities Slide 12-15 Slide 16-26 Slide 27-30 Slide 31-35 11
Slide 12: Aegon at a glance
Aegon at a glance Over 150 Life insurance, pensions years of & asset management history Underlying earnings before tax of Present in more EUR 1.9 billion in 2014 than 25 markets Life 6% 5% throughout 6% 10% Americas 31% Individual Savings and Retirement The Netherlands the Americas, 56% United Kingd
Slide 13: Sustainability ingrained in our strategy
Sustainability ingrained in our strategy Products and services A responsible approach Supporting local communities customers can trust to investments Clear and easy to understand Decisions guided by Aegon’s Long history of working with products Responsible Investment Policy and investing in lo
Slide 14: Investing in Aegon
Investing in Aegon Aegon ordinary shares Aegon’s ordinary shares ► Traded on Euronext Amsterdam since 1969 Ticker symbol AGN NA and quoted in euros Underlying ISIN NL0000303709 SEDOL 5927375NL Aegon New York Registry Shares (NYRS) Trading Platform Euronext Amsterdam ► Traded on NYSE since 1991 a
Slide 15: Continued delivery of strong results
Continued delivery of strong results Underlying earnings before tax Net income (EUR million) (EUR million) 1,672 1,982 1,968 1,865 1,775 1,186 936 857 2011 2012 2013 2014 2011 2012 2013 2014 Return on equity Fee-based earnings (%) (% of UEBT) 39% 8.6 8.6 30% 33% 33% 7.8 6.7 2011 2012 2013 2014 2011
Slide 16: Underlying earnings of EUR 562 million
Underlying earnings of EUR 562 million Americas earnings higher driven mostly by Underlying earnings before tax growth in variable annuities and pensions due to markets and net inflows Americas The Netherlands (USD million) (EUR million) Higher earnings in the Netherlands due to a EUR 45 million
Slide 17: Net income of EUR 399 million
Net income of EUR 399 million Fair value items mainly reflect hedging programs without an accounting match in the US and NL; alternative asset returns impacted by under performance of energy sector exposure Gains on investments primarily related to the rebalancing of the fixed income portfolio i
Slide 18: Fair value items impacted by hedge programs and model updates
Fair value items impacted by hedge programs and model updates Total fair value items of EUR (132) million FV hedging with FV hedging without accounting match* accounting match FV investments FV other EUR 24 million EUR (66) million EUR (57) million EUR (33) million Derivatives ∆: EUR 2,094m Derivati
Slide 19: Gross deposits of EUR 13.7 billion
Gross deposits of EUR 13.7 billion Strong variable annuity and mutual fund Gross deposits deposits in the Americas more than offset lower deposits from pensions due to fewer Americas The Netherlands (USD billion) (EUR million) take-overs Higher gross deposits in the Netherlands driven by strong
Slide 20: New life sales of EUR 523 million
New life sales of EUR 523 million Higher new life sales in the Americas mainly New life sales driven by strong universal life sales Americas The Netherlands Lower new life sales in the Netherlands the (USD million) (EUR million) result of signing fewer, but more profitable, pension contracts D
Slide 21: MCVNB of EUR 196 million
MCVNB of EUR 196 million Lower MCVNB in the Americas as the Market consistent value of new business impact of lower interest rates more than offset the benefit of higher sales Americas The Netherlands (USD million) (EUR million) MCVNB decline in the Netherlands driven by lower contribution from
Slide 22: Operational free cash flows and holding excess capital
Operational free cash flows and holding excess capital Operational free cash flows of EUR 338 million excluding market impacts and one-time items ► Market impacts and one-time items totalling EUR (12) million ► Positive market impacts in the Americas largely offset by negative impacts in the Nethe
Slide 23: Group and local capitalization levels
Group and local capitalization levels Group IGD solvency ratio of 208%; Holding excess capital of EUR 1.2 billion Excess capital in the United States of USD ~1.1 billion over S&P AA level IGD ratio in the Netherlands of ~215% impacted by declining interest rates Pillar 1 ratio in the UK down
Slide 24: Capital allocated to run-off businesses
Capital allocated to run-off businesses Current capital allocated to run-off businesses of USD 2.0 billion ► Return on capital of run-off businesses of 0.5% year to date Capital intensive run-off businesses negatively impact return on equity ► Capital allocated to run-off businesses included in
Slide 25: Americas
Americas Earnings growth driven by higher variable Underlying earnings Operating expenses annuity and pension balances due to before tax (USD million) (USD million) positive markets and net inflows Operating expenses at similar level while growing the business 408 467 480 464 483 Higher life a
Slide 26: The Netherlands
The Netherlands Higher earnings driven by a EUR 45 million Underlying earnings Operating expenses release resulting from a new employee before tax (EUR million) (EUR million) pension arrangement Lower operating expenses mainly driven by a new employee pension arrangement 172 190 195 124 127 Ne
Slide 27: United Kingdom
United Kingdom Underlying earnings up 37% to GBP 22 Underlying earnings Operating expenses million due to improved persistency before tax (GBP million) (GBP million) Higher operating expenses mainly due to GBP 26 million cost for the implementation of the pension fee cap 22 22 117 16 84 83 Low
Slide 28: New Markets
New Markets Lower earnings as growth in Asset Underlying earnings Operating expenses Management more than offset by higher before tax (EUR million) (EUR million) surrenders in Poland, the recurring effect of assumption changes and model updates in Asia and the derecognition of France 46 198 40 176
Slide 29: Reconciliation of effective tax rate Q4 2014
Reconciliation of effective tax rate Q4 2014 Reconciliation of effective tax rate Q4 2014 New Markets/ EUR million Americas The Netherlands United Kingdom Total Holdings Income before tax 167 377 34 (67) 511 Nominal tax rate 35.0% (59) 25.0% (94) 21.5% (7) N/A 14 (146) Actual income tax (17) (105) 1
Slide 30: 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 September 30, 2014 84.1 50.2 12.7 4.5 Net in- and outflow (4.8) 0.5 (0.2) 0.3 Unrealized / realized results 0.9 1.2 0.6 0.1 Foreign
Slide 31: Energy & oil services exposure
Energy & oil services exposure US general account energy & oil services exposure USD million AAA AA A BBB <BBB/NR Total Independent - 97 475 934 107 1,613 Oil field services - 39 165 320 72 595 Midstream - - 277 1,324 66 1,667 Integrated 175 686 483 191 - 1,535 Refining - - - 141 9 150 Total corpora
Slide 32: Main economic assumptions
Main economic assumptions Main US economic assumptions 10-year US Treasury assumed to grade to 4.25% by 2024 3-month US Treasury assumed to grade to 2.5% by 2024 Credit spreads are assumed to grade to 110 bps by 2016 Bond funds are assumed to return 4% until 2024 and 6% thereafter Annual g
Slide 33: Earnings sensitivities to equity markets and reinvestment yields
Earnings sensitivities to equity markets and reinvestment yields Protection of capital position main purpose of macro Macro hedge equity sensitivity estimates hedging program Total equity return in Fair value items impact quarter IFRS accounting mismatch between hedges and liabilities -8% ~USD (
Slide 34: Upcoming events
Upcoming events March May AIFA Conference Q1 2015 results Naples, FL May 13, 2015 March 2, 2015 Annual General Meeting Publication of 2014 of Shareholders Annual Report The Hague March 20, 2015 May 20, 2015 HSBC Conference London March 23, 2015 Morgan Stanley Financials Conference London March 26, 2
Slide 35: Disclaimers
Disclaimers 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 proportion