Aegon Ltd. · EURONEXT:AGN
Aegon — H1 2018 Earnings Presentation
31 slides from Aegon's earnings presentation, Aug 16, 2018
Slide 1: 1H 2018 Results
1H 2018 Results Alex Wynaendts Matt Rider The Hague – August 16, 2018 CEO CFO
Slide 2: 1H 2018 demonstrates focus on efficiency, growth and capital
1H 2018 Results 2 1H 2018 demonstrates focus on efficiency, growth and capital Operational excellence Commitment to growth Capital allocation discipline • On track to reach EUR 350 • 10% earnings growth on constant • On track to reach capital return million expense savings target currencies in 1H18
Slide 3: Delivering on key milestones of UK transformation
1H 2018 Results 3 Delivering on key milestones of UK transformation • Platform and omni-channel distribution strategy have established Aegon as #1 platform provider with GBP 120 billion AuA • Completed several major migrations related to Cofunds integration - Aegon has taken measures to solve operat
Slide 4: Gross deposits increase by 8% to EUR 64 billion
1H 2018 Results 4 Gross deposits increase by 8% to EUR 64 billion • Gross deposits increased by 8% to EUR 64 billion, as strong deposits in Asset Management more than offset adverse currency movements and lower deposits on the UK platform - Asset management gross deposits benefited from strong inflo
Slide 5: Accident & Health sales impacted by product exits in the US
1H 2018 Results 5 Accident & Health sales impacted by product exits in the US • New life sales declined by 2% to EUR 422 million on a constant currency basis, driven by lower term life and indexed universal life sales in the United States and lower sales in the Asian High-Net-Worth businesses • New
Slide 6: Accelerate growth in chosen markets in the US business
1H 2018 Results 6 Accelerate growth in chosen markets in the US business Impacts Management actions • Product enhancements to drive Variable • DOL fiduciary ruling competitive position Annuity • Low interest rates • Increase share of wallet with distributors • Increase revenue through managed • Outf
Slide 7: Making clear choices to unlock value of Asian businesses
1H 2018 Results 7 Making clear choices to unlock value of Asian businesses Progress since Status Focus 2015 • ~10% RoC in 1H18 • Regular annual dividend payments • Optimized solvency position • Accelerating release of capital • Maximize value via management actions through run-off • On trajectory to
Slide 8: Delivering on commitment to optimize portfolio
1H 2018 Results 8 Delivering on commitment to optimize portfolio Building on strong Continue to focus on Management actions track-record of markets where Aegon to improve profitability portfolio optimization has leading positions Spain & Portugal Divested over EUR ~5 billion Divested Aegon Ireland E
Slide 9: On track to deliver on 2018 targets
1H 2018 Results 9 On track to deliver on 2018 targets Run-rate annualized expense savings Cumulative capital return to shareholders Return on Equity (EUR million) (EUR billion) (%) EUR 10% 350m* EUR 10% 2 by 4Q18 300 2.1bn 200 1 5% 100 0 0 0% 2016 2017 1H 2018 2018 2016 2017 1H 2018 2018 2016 2017 1
Slide 10: 1H 2018 Financials
1H 2018 Results 10 1H 2018 Financials
Slide 11: Underlying earnings increase by 10% on a constant currency basis
1H 2018 Results 11 Underlying earnings increase by 10% on a constant currency basis • Adverse mortality experience in the US driven by higher claims frequency, reflecting higher than expected seasonality • Benefit from expense savings initiatives since the launch of the program in 2016 reflected in
Slide 12: Expense savings of EUR 350 million on track for year-end 2018
1H 2018 Results 12 Expense savings of EUR 350 million on track for year-end 2018 Declining core operating expenses (EUR million) 2,000 • Continued execution of expense savings program drives reduction in core operating expenses 1,800 • Annualized run-rate savings achieved of approximately EUR 325 mi
Slide 13: Net income amounts to EUR 491 million in 1H18
1H 2018 Results 13 Net income amounts to EUR 491 million in 1H18 Underlying earnings to net income development in 1H18 (EUR million) UEBT 1H18 1,064 Realized losses Primarily from the sale of US treasuries as part of ongoing Fair value items (3) asset-liability management Realized losses (67) Net im
Slide 14: Long-Term Care continues to perform in line with expectations
1H 2018 Results 14 Long-Term Care continues to perform in line with expectations • IFRS assumption review completed with no material charges; annual statutory reserve testing to be completed in 2H18 • IFRS Actual to Expected of 97.5% for 1H18 continues to track in line with our best estimate assumpt
Slide 15: Group solvency ratio increases significantly to 215%
1H 2018 Results 15 Group solvency ratio increases significantly to 215% OF and SCR development (EUR billion) • Expected return (+10%) reflects strong business performance SII 201% +10% -3% +3% -2% +6% 215% • Capital return (-3%) primarily driven by external dividends to shareholders • Market varianc
Slide 16: Main units solvency ratios remain well within or above target zones
1H 2018 Results 16 Main units solvency ratios remain well within or above target zones Local solvency ratio by unit Market impacts & one-time items in 1H18 (%) 1H18 490% • Positive impacts from equity market and interest rate movements 2H17 472% • Management actions including previously announced pr
Slide 17: Overall quality of capital increases significantly
1H 2018 Results 17 Overall quality of capital increases significantly • Unrestricted Tier 1 capital as a percentage of SCR increased by 16%-pts in 1H18, driven by increase in own funds • Following the increase in unrestricted Tier 1 capital, overflow from restricted Tier 1 to Tier 2 reduced • Gross
Slide 18: Holding excess cash increases to EUR 1.9 billion
1H 2018 Results 18 Holding excess cash increases to EUR 1.9 billion • Holding excess cash temporarily above target range of EUR 1.0 - 1.5 billion partly due to the net debt issuance - EUR 700 million earmarked for debt redemptions in 2H18 • The Holding received EUR 593 million in gross remittances f
Slide 19: Free cash flows increased by 47% to EUR 594 million
1H 2018 Results 19 Free cash flows increased by 47% to EUR 594 million • Interim dividend for 2018 increased to EUR 0.14 per common share • On track to return EUR 2.1 billion to shareholders over 2016 - 2018 • Strong capital generation of EUR 1,386 million in the first half of 2018 supports sustaina
Slide 20: Analyst & Investor conference
20 For questions Hosted in December 6, please contact IR New York 2018 +31 70 344 8305 [email protected] Analyst & Investor conference
Slide 21: Appendix
1H 2018 Results 21 Appendix For questions please contact Investor relations +31 70 344 8305 [email protected] P.O. Box 85 2501 CB The Hague The Netherlands
Slide 22: Aegon at a glance
1H 2018 Results 22 Aegon at a glance What we do Life insurance, pensions & Asia asset management for approximately 3% 29 million customers (2H17) Deposits Europe Net deposits €3.9 billion Americas (1H18) 38% History 52% Our roots date back to the first half of the 19th century 7% Employees AAM Over
Slide 23: Americas: Successful expense savings drive higher earnings
1H 2018 Results 23 Americas: Successful expense savings drive higher earnings • Underlying earnings increased to USD 729 million, as expense savings more than offset adverse mortality • Operating expenses increased by 5% due to transition and conversion charges associated with the TCS partnership; e
Slide 24: Europe: Increase in earnings across all regions
1H 2018 Results 24 Europe: Increase in earnings across all regions • Underlying earnings increased to EUR 435 million driven by growth in all regions, especially in NL and CEE • Operating expenses decreased by 11% as a result of divestments and expense savings in NL and UK, which more than offset re
Slide 25: Asia: Better results in all business lines
1H 2018 Results 25 Asia: Better results in all business lines • Underlying earnings increased to USD 38 million, as a result of favorable claims experience and business growth across all business lines • Operating expenses were up mainly as a result of strong sales in China and investments in the HN
Slide 26: Asset Management: Growth in earnings and strong net deposits
1H 2018 Results 26 Asset Management: Growth in earnings and strong net deposits • Underlying earnings up by 19% as a result of higher performance and management fees • Higher operating expenses driven by higher personnel expenses in China as a result of strong performance, partly offset by lower exp
Slide 27: General account investments
1H 2018 Results 27 General account investments June 30, 2018 amounts in EUR millions, except for the impairment data Americas Europe Asia Holdings & other Total Cash/Treasuries/Agencies 15,236 17,120 379 162 32,897 Investment grade corporates 31,151 4,009 3,775 - 38,935 High yield (and other ) corpo
Slide 28: Updated Solvency II sensitivities
1H 2018 Results 28 Updated Solvency II sensitivities Solvency II sensitivities (in percentage points) Scenario Group US NL UK Equity markets +25% +11% +22% +5% -8% Equity markets -25% -9% -12% -6% +2% Interest rates +50 bps +5% +5% +5% +2% Interest rates -50 bps -5% -7% -2% -2% Credit spreads* +50 b
Slide 29: Main economic assumptions
1H 2018 Results 29 Main economic assumptions Overall assumptions US NL UK Exchange rate against euro 1.10 n.a. 0.85 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
Slide 30: Investing in Aegon
1H 2018 Results 30 Investing in Aegon Aegon’s ordinary shares Ticker symbol AGN NA • Aegon ordinary shares ISIN NL0000303709 - Traded on Euronext Amsterdam since 1969 SEDOL 5927375NL and quoted in euros Trading Platform Euronext Amsterdam Country Netherlands • Aegon New York Registry Shares (NYRS) -
Slide 31: Disclaimer
31 Disclaimer Cautionary note regarding non-IFRS 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