Aegon Ltd. · EURONEXT:AGN
Aegon — Q3 2010 Earnings Presentation
21 slides from Aegon's earnings presentation, Nov 11, 2010
Slide 1: Third quarter 2010 results
Third quarter 2010 results Jan Nooitgedagt CFO Media presentation November 11, 2010
Slide 2: Key messages
Key messages Increase in underlying earnings Strong net income Strong sales and deposits Excess capital increased to EUR 3.3 billion, after repayment of EUR 0.5 billion Limited impact from improved Dutch longevity 2
Slide 3: Continued focus on execution of strategy in Q3
Continued focus on execution of strategy in Q3 Reallocate capital Institutional spread-based balances declined USD 1 billion Increased fee business, business reduced spread business in the US Capital preservations of EUR 0.3 billion Exploring strategic options for Transamerica Reinsurance I
Slide 4: Execution of strategy demonstrated by strong results
Execution of strategy demonstrated by strong results Underlying earnings before tax New life sales (EUR million) (EUR million) 590 522 557 478 488 473 538 527 390 492 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Revenue-generating investments Gross deposits* (EUR billion) (EUR billion
Slide 5: Underlying earnings increased 21% compared with Q3 2009
Underlying earnings increased 21% compared with Q3 2009 Americas’ earnings up 8% due to higher fee and investment income partly offset by changes in policyholder behaviour assumptions Continued strong earnings in the Netherlands Results in the UK increased as last year included an exceptional
Slide 6: Impact low interest rates manageable
Impact low interest rates manageable Low interest-rate environment poses longer-term challenges to industry Active management to protect in in-force force book from decline in interest rates Continued low interest rates will put pressure on new business margins Effect of prolonged low intere
Slide 7: Strong net income primarily driven by earnings and fair value items
Strong net income primarily driven by earnings and fair value items Fair value items reflect increase in the fair value of guarantees and related hedges in the Netherlands and in the US Investment gains due to sales of high yield and emerging markets debt in the Netherlands and trading in invest
Slide 8: Impairments mostly linked to US housing related securities
Impairments mostly linked to US housing related securities Gross impairments remained at Q2 2010 level, while recoveries declined Impairments expected to remain at somewhat elevated levels, particularly in US real estate related securities Impairments (EUR million) 416 501 385 394 286 212 150 77
Slide 9: Strong sales and deposits
Strong sales and deposits New life sales increased 7% primarily driven by US retail life sales and pension sales in the UK Gross deposits* 38% up on strong third-party asset management deposits Fixed annuities de-emphasized VNB declined d li d due d to t a change h in i business b i miix New
Slide 10: Excess capital up despite EUR 500 million repayment
Excess capital up despite EUR 500 million repayment Excess capital up on earnings and capital preservations Excess capital of EUR 3.3 billion above S&P’s AA capital adequacy requirements – EUR 2.0 billion in operating units (Q2: EUR 1.9 billion) – EUR 1.3 billion at the holding company (Q2: EUR
Slide 11: Continued strong capital position
Continued strong capital position Core capital* at 74% of total capital base – above threshold of 70%; managing to at least 75% by the end of 2012 Repayment of EUR 0.5 billion to the Dutch State in August 2010 IGD solvency ratio of 205% (Q2: ~ 200%) Shareholders’ equity (EUR billion) Total cap
Slide 12: Impact improved longevity in the Netherlands manageable
Impact improved longevity in the Netherlands manageable New mortality tables show a strong increase in life expectancy Dutch population No impact on earnings in Q4 2010 Expected one-off negative impact on excess capital of less than EUR 250 million in Q4 2010 Dutch life expectancy in 2050 Male
Slide 13: Conclusion
Conclusion Increase in underlying earnings Strong net income Strong sales and deposits Excess capital increased to EUR 3.3 billion, after repayment of EUR 0.5 billion Limited impact from improved Dutch longevity 13
Slide 14: Life Insurance Pensions Investments
LIFE INSURANCE PENSIONS INVESTMENTS WEGON
Slide 15: Appendix
Appendix 15 WEGON
Slide 16: Restructuring in the UK on track
Restructuring in the UK on track Targets 25% cost reduction by end 2011 Increase RoC to 8-10% by 2014 New business RoC of >12% Cumulative operating cash flows of GBP 600-650 million from 2010 to 2014 Execution in Q3 Restructuring of sales division Closure of employee benefits software bu
Slide 17: Macro equity hedge increased
Macro equity hedge increased Macro equity hedge on US variable annuity GMIB back-book increased to USD 2.3 billion in October Macro hedge program consists of total return swaps on multiple indices VA GMIB b backk-b bookk equit ity exposure off USD 2 2.9 9 billi billion now ~80% 80% h hed dged
Slide 18: Operating expenses declined 1% at constant currencies
Operating expenses declined 1% at constant currencies Total operating expenses at constant currencies declined 1%; cost reductions offset by investments in new capabilities and new markets Operating expenses: – Americas decreased on a comparable basis as result of expense savings – Netherlands d
Slide 19: Shareholders' equity continues to improve
Shareholders’ equity continues to improve Shareholders' equity rose sequentially as a result of net income and improved revaluation reserves offset by the weaker US dollar Positive revaluation reserves of EUR 2.3 billion Shareholders’ equity development Q3 2010 (EUR billion) 17.2 0.7 1.7 (1.5) (
Slide 20: For questions please contact Group Corporate Communications
For questions please contact Group Corporate Communications T: +31 70 344 8956 E: [email protected] www.aegon.com P.O. Box 85 2501 CB The Hague The Neth Th therlland ds
Slide 21: Disclaimer
Disclaimer Cautionary C ti note t regarding di non-GAAP GAAP measures This presentation includes certain non-GAAP financial measures: underlying earnings before tax and value of new business. The reconciliation of underlying earnings before tax to the most comparable IFRS measure is provided in Note