Aegon Ltd. · EURONEXT:AGN
Aegon — Q4 2015 Earnings Presentation
33 slides from Aegon's earnings presentation, Feb 19, 2016
Slide 1: Q4 2015 Results
Q4 2015 Results The Hague – February 19, 2016 Alex Wynaendts Darryl Button CEO CFO
Slide 2: Record sales, solid capital position and increased final dividend
Record sales, solid capital position and increased final dividend Net income increased; underlying earnings impacted by lower US earnings and one-time items Record-high sales driven by growth of fee-based deposit businesses Strong start to 2016-2018 cost savings program Solvency II ratio at
Slide 3: Lower underlying earnings mainly driven by US and one-time items
Lower underlying earnings mainly driven by US and one-time items Lower earnings from US driven by the effect of Q3 assumption changes and model updates, adverse morbidity, lower annuities and retirement plans earnings and the divestment of Canada Earnings increased in NL as lower funding costs a
Slide 4: Strong start to USD 150 million cost savings program in the US
Strong start to USD 150 million cost savings program in the US Eliminate divisional separation Restructure Create unified organization that is functionally aligned ONE Transamerica: internal & external alignment to a single brand Management delayering via streamlining processes Reduce Rest
Slide 5: Net income supported by recoveries and lower fair value losses
Net income supported by recoveries and lower fair value losses Fair value losses mainly driven by hedge programs as a result of higher equity markets Gains on investments as a result of rebalancing the investment portfolios in NL and UK Net recoveries included a legal settlement on previously
Slide 6: Record-high sales driven by strong increase in gross deposits
Record-high sales driven by strong increase in gross deposits Gross deposits increased 63%, driven by asset management and NL bank deposits New life sales declined as higher IUL sales in the US and favorable currency movements were more than offset by withdrawal of UL secondary guarantee product
Slide 7: Strong increase in 2015 deposits and revenue-generating investments
Strong increase in 2015 deposits and revenue-generating investments Growth in off balance sheet revenue-generating investments (RGIs) resulting from strategic shift to capital light businesses Net deposits increased strongly, primarily driven by asset management – particularly Dutch mortgage fun
Slide 8: High-quality US fixed income portfolio – limited impairments expected
High-quality US fixed income portfolio – limited impairments expected Market volatility currently high, but risk of permanent loss limited Impairments expected to increase in 2016, but remain below long-term average of 28 basis points for US portfolio Relatively large US Treasury holdings supp
Slide 9: Strong capital position supports share buyback and increasing dividend
Strong capital position supports share buyback and increasing dividend Solvency II ratio at year-end 2015 reaffirmed at ~160% Excess capital of EUR 1.4 billion after redemption of USD 500 million senior debt in December Share buyback of EUR 400 million launched at the 2016 investor day on Janu
Slide 10: Delivering on strategic objectives will allow us to achieve ambitions
Delivering on strategic objectives will allow us to achieve ambitions • Offer solutions throughout the customer lifecycle • Engage directly and connect digitally with our customers • Simplifying our business by digitizing processes and increasing self-service • Grow scale in asset management, admini
Slide 11: Upcoming events
Upcoming events February AIFA Conference Naples, Florida February 29, 2016 March KBW Life Insurers & Morgan Stanley Technology Conference Financials Conference London London March 3, 2016 March 15, 2016 Barclays EU Financials Annual Report Capital Summit Publication London The Hague March 9, 2016 Ma
Slide 12: Q4 2015 Appendix
Q4 2015 Appendix results continued For questions please contact Investor Relations +31 70 344 8305 [email protected] P.O. Box 85 2501 CB The Hague The Netherlands
Slide 13: Index
Index Press subject to go directly to the section 4Q15 4Q15 4Q15 Strategy Asset portfolio Financials Reconciliation support tables, assumptions & sensitivities Slide 14-17 Slide 18-21 Slide 22-27 Slide 28-31 13
Slide 14: Aegon at a glance
Aegon at a glance Focus History Employees Life insurance, pensions & asset Our roots date back to the first half of Over 31,500 employees management for 30 million customers the 19th century December 31, 2015 Underlying earnings before tax Revenue-generating investments Paid out in claims and benefi
Slide 15: Responsible business embedded in our strategy
Responsible business embedded in our strategy Our commitment: “To act responsibly and to create positive impact for all our stakeholders” Putting our customers at the Having a responsible Promoting retirement Empowering our employees center of what we do investments approach readiness Deliver prod
Slide 16: Simplified reporting as of Q1 2016 underlines focused approach
Simplified reporting as of Q1 2016 underlines focused approach Asset management to report separately as importance for the group increases Clear geographical reporting segments Continue to provide details of underlying earnings by lines of business Americas Europe Asia Asset management Underly
Slide 17: Aligning accounting with inforce management
Aligning accounting with inforce management Scope for Move from DAC recoverability testing on legal entity level to testing on portfolio level UK DAC DAC policy Upgrade to platform considered substantial modification of contract leading to DAC derecognition for upgrading Allows for value-added
Slide 18: General account investments by geography
General account investments by geography December 31, 2015 amounts in EUR millions, except for the impairment data Americas Netherlands United Kingdom New Markets & Other Total Cash/Treasuries/Agencies 16,186 14,947 5,174 610 36,917 Investment grade corporates 39,598 5,088 5,139 3,367 53,192 High yi
Slide 19: Structured assets and corporate bonds by rating
Structured assets and corporate bonds by rating December 31, 2015 amounts in EUR millions AAA AA A BBB <BBB NR Total Structured assets by rating Commercial MBS 4,481 1,039 322 165 147 - 6,153 Residential MBS 2,100 220 226 291 2,330 - 5,167 Non-housing related ABS 3,272 1,286 2,474 562 311 - 7,905 To
Slide 20: US direct and indirect energy & commodity exposure
US direct and indirect energy & commodity exposure December 31, 2015 amounts in EUR millions Unrealized AAA AA A BBB <BBB/NR Total gain / (loss) Independent - 71 278 766 86 1,201 (64) Oil field services - 42 190 133 65 431 (75) Midstream - - 239 945 87 1,272 (79) Integrated 153 589 430 295 121 1,587
Slide 21: Through the cycle impairments average 28 basis points
Through the cycle impairments average 28 basis points 2015 net recoveries in the US of 9 basis points Average credit losses in line with long-term expectations Impairments expected to trend up but remain below long-term average Impairments on US general account fixed income assets 120 (in bps)
Slide 22: Underlying earnings amounted to EUR 486 million
Underlying earnings amounted to EUR 486 million Earnings in Americas impacted by annuities, Underlying earnings before tax retirement plans, the divestment of Canada and reduction in recurring earnings following Americas The Netherlands assumption changes and model updates (USD million) (EUR milli
Slide 23: Fair value items impacted by hedge programs and investments
Fair value items impacted by hedge programs and investments Total of EUR (65) million FV hedging with FV hedging without accounting match accounting match FV investments FV other EUR 63 million EUR (105) million EUR (5) million EUR (18) million Derivatives ∆: EUR (573)m Derivatives ∆: EUR (173)m Lia
Slide 24: Gross deposits increased to EUR 22.3 billion
Gross deposits increased to EUR 22.3 billion Lower gross deposits in the Americas as Gross deposits growth in pensions was more than offset by lower deposits in VA Americas The Netherlands (USD billion) (EUR billion) Gross deposits in the Netherlands up due to continued strong performance from K
Slide 25: New life sales amounted to EUR 440 million
New life sales amounted to EUR 440 million New life sales in the Americas decreased, New life sales as higher indexed UL sales were more than offset by the divestment of Canada, Americas The Netherlands withdrawal of UL secondary guarantee (USD million) (EUR million) product, and lower term life s
Slide 26: MCVNB of EUR 149 million impacted by lower interest rates
MCVNB of EUR 149 million impacted by lower interest rates Lower MCVNB in the Americas mainly Market consistent value of new business driven by the divestment of Canada and a lower contribution from VA, caused by lower Americas The Netherlands interest rates (USD million) (EUR million) MCVNB in t
Slide 27: Operating expenses amounted to EUR 997 million
Operating expenses amounted to EUR 997 million Operating expenses in the Americas declined Operating expenses as lower expenses arising from divestment of Canada and employee incentive plans more Americas The Netherlands than offset higher restructuring expenses (USD million) (EUR million) Incre
Slide 28: Operational free cash flows and holding excess capital
Operational free cash flows and holding excess capital Operational free cash flows* of EUR 377 million ► One-time items of EUR (80) million were primarily related to negative impacts of non-economic assumptions in the Netherlands and asset adequacy reserve increases in the US ► Negative market imp
Slide 29: Capital allocated to run-off businesses further reduced in 2015
Capital allocated to run-off businesses further reduced in 2015 Current capital allocated to run-off businesses of USD 1.7 billion Capital intensive run-off businesses negatively impact return on equity ► Capital allocated to run-off businesses included in RoE calculations, but earnings are excl
Slide 30: Main economic assumptions
Main economic assumptions Overall assumptions US NL UK Exchange rate against Euro 1.10 N.a. 0.71 Annual gross equity market return (price appreciation + dividends) 8% 7% 7% Main assumptions for financial targets US NL UK 10-year government bond yields Develop in line with forward curves per year-end
Slide 31: 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 IFRS accounting mismatch between hedges and liabilities quarter GMIB lia
Slide 32: Investing in Aegon
Investing in Aegon Aegon ordinary shares Aegon’s ordinary shares ► Traded on Euronext Amsterdam since 1969 Ticker symbol AGN NA ISIN NL0000303709 and quoted in euros SEDOL 5927375NL Trading Platform Euronext Amsterdam Aegon New York Registry Shares (NYRS) Country Netherlands ► Traded on NYSE sin
Slide 33: Disclaimers
Disclaimers Cautionary note regarding non-IFRS measures This document includes the following non-IFRS financial measures: underlying earnings before tax, income tax and income before tax. These non-IFRS measures are calculated by consolidating on a proportionate basis Aegon’s joint ventures and asso