Aegon Ltd. · EURONEXT:AGN
Aegon — Q3 2021 Earnings Presentation
30 slides from Aegon's earnings presentation, Nov 11, 2021
Slide 1: 3Q 2021 results
3Q 2021 results Lard Friese Chief Executive Officer Matt Rider Chief Financial Officer November 11, 2021 Helping people achieve a lifetime of financial security
Slide 2: Continuing to deliver on strategic priorities
Continuing to deliver on strategic priorities 1 Continuing to deliver on financial and strategic commitments 2 Executing the operational improvement plan; results impacted by mortality claims 3 Benefiting from growth initiatives in Strategic Assets and Growth Markets 4 Managing our Financial Assets
Slide 3: Executing on Aegon's granular operating plan
Executing on Aegon’s granular operating plan Initiative delivery • Disciplined execution of the (in no. of initiatives) operational improvement plan 93 684 1,140 135 • Continuous process of developing new initiatives to capture the full Growth potential of our organization 278 initiatives 549 • Exec
Slide 4: Consistently growing US Strategic Assets
Consistently growing US Strategic Assets US – Individual Solutions US – Workplace Solutions New life sales New business strain Value of new life Retirement Plans Middle-Market Retirement Plans Middle-Market (in USD million) (in USD million) business written sales net deposits (in USD million, (in US
Slide 5: Implementing our strategy in NL and UK Strategic Assets
Implementing our strategy in NL and UK Strategic Assets NL UK Mortgage Workplace net Net growth Knab Workplace net Retail net Platform Revenues origination deposits customers deposits deposits expenses/AuA gained/(lost) on (in EUR billion) (in EUR million) (in 1,000 customers) (in GBP million) (in G
Slide 6: Growing in Asset Management and Growth Markets
Growing in Asset Management and Growth Markets Asset Management Growth Markets (Spain & Portugal, China2, Brazil) Third-party Operating margin Operating result New life sales Value of new life New premium net deposits Global Platforms Strategic (in EUR million) business production Global Platforms (
Slide 7: Committing to net-zero by 2050
Committing to net-zero by 2050 Group-wide commitments • Joining the Net-Zero Asset Net-zero Net-zero greenhouse gas emissions from by 2050 general account investments by 2050 Owner Alliance • Net-zero target for 2050, with 5-year interval targets • Engaging with most carbon- intensive companies in p
Slide 8: 3Q 2021 Financial Results
3Q 2021 Financial Results Matt Rider Chief Financial Officer 8
Slide 9: Financial results 3Q 2021
Financial results 3Q 2021 Addressable expense savings1 Free Cash Flows2 • On track to achieving the target of (from expense initiatives) (year-to-date 2021) EUR 400 million expense savings EUR 248 million EUR 312 million • Higher equity markets and business growth were more than offset by impact of
Slide 10: On track to deliver expense savings target
On track to deliver expense savings target Addressable expenses • Expense initiatives drove the reduction (in EUR million, in constant currency) of expenses by EUR 248 million -8% 3,1031 • Expense savings delivered in 3Q21 were offset by higher one-time employee expenses 2481 • Other net expense ben
Slide 11: Operating result of EUR 443 million impacted by adverse mortality
Operating result of EUR 443 million impacted by adverse mortality Operating result (in EUR million) Claims experience in US Operating result 526 • EUR 93 million adverse mortality claims experience in Life 3Q 2020 driven by COVID-19 and higher average claim size Americas (111) • Favorable morbidity
Slide 12: Net loss driven by Other charges as a result of management actions
Net loss driven by Other charges as a result of management actions Net result (3Q 2021, in EUR million) Operating result 443 Non-operating items • Fair value losses in the Netherlands from impact of lower Fair value items (130) spreads and higher inflation expectations on liabilities, which offset g
Slide 13: Capital position of main units above the operating level
Capital position of main units above the operating level • Negative impact from separate account returns and 2Q 2021 444% interest rate movements +2%-pts RBC ratio • Less than 5%-points negative impact from 3Q 2021 446% US, regulated entities VA management actions, in line with prior guidance • Oper
Slide 14: Cash Capital at Holding around the middle of operating range
Cash Capital at Holding around the middle of operating range Cash Capital at Holding (in EUR million) • Free cash flows to the Holding of EUR 62 million in 3Q21, and 99 1,386 1,500 EUR 312 million year-to-date (37) (53) • Gross remittances supported by (192) Opera- capital release from ongoing Free
Slide 15: Successfully implementing management actions on the Variable Annuities Financial Asset
Successfully implementing management actions on the Variable Annuities Financial Asset US Variable Annuities (50) 98% Performance Capital generation Dynamic hedge effectiveness1 (in USD million) (in %) YTD 567 97% 98% 99% 99% 302 86% 169 79 (50) 3Q20 4Q20 1Q21 2Q21 3Q21 3Q20 4Q20 1Q21 2Q21 3Q21 Deve
Slide 16: Delivering on rate increases for the LTC Financial Asset
Delivering on rate increases for the LTC Financial Asset US Long-Term Care (LTC) 83% 118 Performance Actual to expected Progress on rate Capital claims ratio increases program generation (in %) (value of approved rate increases (in USD million) as % of total program) 73% 70% 83% 103% of initial expe
Slide 17: Generating capital from the NL Life Financial Asset
Generating capital from the NL Life Financial Asset NL Life book 172% 25 55 Performance Solvency II Remittances Operating capital ratio to Aegon NL generation (in %) (in EUR million) (in EUR million) 67 170% 172% 172% 55 159% 149% Operating level (150%) 25 25 25 25 28 27 Min. dividend payment level
Slide 18: Continuing active risk and capital management
Continuing active risk and capital management Nearly completed the planned interest rate risk reduction in the US On track to achieving the target of EUR 400 million expense savings Expanded dynamic hedging to legacy variable annuities Strong Taking management actions to balance reduce volatility in
Slide 19: Concluding remarks
Concluding remarks Lard Friese Chief Executive Officer 19
Slide 20: Key messages / Investment proposition
1 Continuing to deliver on financial and strategic commitments 2 Executing the operational improvement plan; results impacted by mortality claims Key 3 Benefiting from growth initiatives in Strategic Assets and Growth Markets messages 4 Managing our Financial Assets proactively 5 Committing to net-z
Slide 21: 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 22: Group Solvency II ratio amounts to 209%
Group Solvency II ratio amounts to 209% Own funds (OF) and Solvency Capital Requirement (SCR) development (in EUR million) SII 208% +4% -1% -1% +0% -2% 209% • Solid contribution from operating 17 capital generation including strong (54) 108 435 business margins in UK 19,436 (749) OF • Market varianc
Slide 23: Well-managed capital sensitivities
Well-managed capital sensitivities Solvency II and RBC sensitivities (in percentage points, 3Q 2021) Scenario Group NL Life3 UK4 US5 US RBC6 Equity markets +25% +7% +3% +3% +18% +19% Equity markets -25% -11% -3% -9% -27% -33% Interest rates +50 bps -1% -4% +2% -1% -3% Interest rates -50 bps -2% +5%
Slide 24: Net recoveries in 2021 year-to-date
Net recoveries in 2021 year-to-date 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 9 8 8 22 1 2 4 2 1 3 1 (6) (2) (2) (9) (3) (4) 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201
Slide 25: 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 26: Leverage ratio benefits from debt reduction
Leverage ratio benefits from debt reduction in 2020 and 3Q 2021, as well as increased shareholders’ equity Gross financial leverage Gross financial leverage ratio (in EUR billion) (in %) 7.4 32.2% 7.0 30.7% 6.7 6.7 29.2% 28.6% 27.9% Senior 2.4 6.0 5.9 25.2% 2.3 1.8 1.7 1.2 1.3 Hybrid 5.0 4.7 4.9 4.9
Slide 27: 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 28: Aegon Investor Relations
Aegon Investor Relations Stay in touch Upcoming events 2021 Contact Investor Relations NYSE Financials Investor Jan Willem Weidema December 1, 2021 +31 70 344 8028 Access Day (virtual) Head of Investor Relations Sean Dargan +1 443 475 3736 Citi’s Insurance Conference Investor Relations Officer Janua
Slide 29: 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 30: Disclaimer
Disclaimer Cautionary note regarding non-IFRS-EU measures This document includes the following non-IFRS-EU financial measures: operating result, income tax, result before tax, market consistent value of new business, return on equity and addressable expenses. These non-IFRS-EU measures, except for a