Aegon Ltd. · EURONEXT:AGN
Aegon — Q3 2013 Earnings Presentation
31 slides from Aegon's earnings presentation, Nov 7, 2013
Slide 1: Q3 2013 Results
Q3 2013 Q3 2013 Results Results The Hague – November 7, 2013 Alex Wynaendts Darryl Button CEO CFO
Slide 2: Key messages
Key messages Profitable sales momentum continues Solid growth in underlying earnings Net income impacted by long-term economic assumptions update Continued strong capital position; cash flows compressed by one-time items 2
Slide 3: Progress towards 2015 targets
Progress towards 2015 targets Double fee-based earnings to Increase annual normalized Grow underlying earnings Trajectory towards operational free cash flow to before tax by 30-35% € 1.3-1.6 7-10% 8-10% billion on average per annum return on equity by 2015 of underlying earnings by 2015 by 2015 betw
Slide 4: Strong US deposits drive total sales increase of 9% to EUR 1.7 billion
Strong US deposits drive total sales increase of 9% to EUR 1.7 billion New life sales increased 2% to EUR 412 million driven by UK and New Markets ► Strong group pensions and platform sales drive 17% increase in the UK to GBP 190 million ► New markets up 6% to EUR 51 million on growth in Asia and
Slide 5: Leading presence in US Accumulation and At-Retirement segments
Leading presence in US Accumulation and At-Retirement segments Strong distribution and demand driving higher US variable annuity deposits in Q3 2013 US pension deposits up 43%, focus on retirement readiness results in higher participation and contribution rates US mutual fund deposits: positiv
Slide 6: Strong increase in profitability of new business
Strong increase in profitability of new business Market consistent value of new business in the Americas more Market consistent VNB than doubled (EUR million) 285 ► VA benefited from continued sales momentum as well as increased margins following higher interest rates 202 173 ► Life up on repricin
Slide 7: Continued focus on cost efficiency
Continued focus on cost efficiency Operating expenses up 4% on comparable basis and at constant currencies Operating expenses ► Restructuring expenses of EUR 42 million (EUR million) ► Non-recurrence of provision release in Q3 2012 844 830 777 Higher sales and employee performance related expens
Slide 8: Underlying earnings up on lower leverage costs and favorable markets
Underlying earnings up on lower leverage costs and favorable markets In the Americas higher Pensions and Variable Annuity earnings as well as favorable mortality in Life & Protection were partly offset by unfavorable currency exchange rates Netherlands stable, better performance in Pensions and
Slide 9: Net income impacted by fair value items
Net income impacted by fair value items Fair value items impacted by economic assumption changes and hedging losses in the Americas Gains on investments are the result of portfolio changes in the Netherlands to align with new regulatory yield curve used for solvency Impairments largely related
Slide 10: Fair value items impacted by economic assumption update and hedging
Fair value items impacted by economic assumption update and hedging Total fair value items of EUR (493) million FV hedging with FV hedging without FV investments FV other accounting match accounting match EUR 13 million EUR 31 million EUR (116) million EUR (421) million Derivatives ∆: EUR (523)m Der
Slide 11: Long-term economic assumptions more in line with market observations
Long-term economic assumptions more in line with market observations Fair value impact Economic assumption Current Previous (EUR million) Equity market total return 8% (incl. 2.5% dividend yield) 9% (incl. 2.5% dividend yield) ~(135) Interest rates – 10yr US treasury 4.25%; 10yr grading period 4.75%
Slide 12: Normalized operational free cash flows of EUR 291 million
Normalized operational free cash flows of EUR 291 million Operational free cash flows of EUR 88 million impacted by market movements and one- time items of EUR (203) million ► Market impacts of EUR (91) million mainly the result of lower credit spreads in the UK and the tax impact of YTD hedging l
Slide 13: Solid group and local capital positions
Solid group and local capital positions Group IGD ratio of 208%, reflecting strong operating unit regulatory capital positions US S&P excess capital increased to USD ~900 million as earnings were partially offset by higher required capital and additional tax requirements Stable NL IGD ratio; n
Slide 14: Further improvement of leverage ratio
Further improvement of leverage ratio Gross financial leverage ratio improved to 30.1% as outstanding commercial paper was reduced by ~EUR 200 million following Q2 debt redemption of USD 750 million Holding excess capital of EUR 1.8 billion ► Cash received from CAM divestment used to fund divide
Slide 15: Key messages
Key messages Profitable sales momentum continues Solid growth in underlying earnings Net income impacted by long-term economic assumptions update Continued strong capital position; cash flows compressed by one-time items 15
Slide 16: Upcoming events
Upcoming events November December Citi global financials Société Générale conference Premium review conference Hong Kong Paris November 20, 2013 December 5, 2013 Morgan Stanley Citi financials conference Sustainable investor day London Paris December 13, 2013 November 28, 2013 Download IR & Media Ap
Slide 17: Appendix
Appendix For questions please contact Investor Relations +31 70 344 8305 [email protected] P.O. Box 85 2501 CB The Hague The Netherlands Download IR & media App in the appstore
Slide 18: Sustainability efforts support strategy
Sustainability efforts support strategy Products and services customers can trust A responsible approach to investments Supporting local communities Introducing products that are Decisions guided by Long tradition of working clearer and easier to understand Responsible Investment Policy with a
Slide 19: Main economic assumptions
Main economic assumptions Main US economic assumptions 10-year US Treasury assumed to grade up over ten years to 4.25% Credit spreads are assumed to grade down over two years to 110 bps Bond funds are assumed to return 4% for 10 years and 6% thereafter Money market rates are assumed to remai
Slide 20: Capital allocated to run-off businesses
Capital allocated to run-off businesses Current capital allocated to run-off businesses of USD 2.3 billion ► Return on capital of run-off businesses of 1.2% year to date Capital intensive run-off businesses negatively impact return on equity ► Capital allocated to run-off businesses is included
Slide 21: New life sales of EUR 412 million
New life sales of EUR 412 million New life sales in the Americas decreased mainly as higher sales of term life were more than offset by lower universal life sales due to focus on profitability Decreased new life sales in the Netherlands as lower pension sales more than offset higher individual l
Slide 22: Variable annuities and retail mutual funds drive strong gross deposits
Variable annuities and retail mutual funds drive strong gross deposits US pension deposits up 43% driven by successful efforts to increase retirement awareness US variable annuity deposits increased 67% driven by favorable competitive environment Asset management inflows mostly the result of s
Slide 23: Market consistent value of new business of EUR 285 million
Market consistent value of new business of EUR 285 million Strong MCVNB growth in the Americas driven by higher variable annuity sales and margins and improvement in life insurance following product changes MCVNB in the Netherlands higher mainly due to increased contributions from mortgages MC
Slide 24: Underlying earnings increased to EUR 531 million
Underlying earnings increased to EUR 531 million Americas’ earnings higher driven by growth in pensions and variable annuities and positive claims experience Stable underlying earnings in the Netherlands as higher pension and non-life earnings were offset by lower earnings from life and savings
Slide 25: Americas
Americas Higher underlying earnings before tax driven by growth in pensions and variable annuities and positive claims experience of USD 20 million Operating expenses increased due mainly to restructuring costs and other one-time items; on a comparable basis expenses increased 5% New life sale
Slide 26: The Netherlands
The Netherlands Stable underlying earnings as higher pension and non-life earnings were offset by lower earnings from life and savings Operating expenses stable as the benefit of cost savings was offset by investments in the business New life sales decreased as lower pension sales more than of
Slide 27: United Kingdom
United Kingdom Underlying earnings before tax higher as the benefit from higher equity markets was only partially offset by higher business transformation costs Excluding business transformation costs of GBP 8 million, operation expenses decreased, a result of the successful cost reduction progr
Slide 28: New Markets
New Markets Higher underlying earnings before tax mainly driven by the positive benefit of assumption changes and one-time items in Asia Operating expenses level as cost savings and lower variable expenses in Asset Management offset higher costs in Asia and the insurance tax in Hungary Higher
Slide 29: 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 June 30, 2013 82.3 44.0 10.4 3.6 Net in- and outflow (0.4) 0.5 0.0 0.1 Unrealized / realized results (0.3) (0.1) 0.1 (0.0) Foreign
Slide 30: Reconciliation of effective tax rate Q3 2013
Reconciliation of effective tax rate Q3 2013 Reconciliation of effective tax rate Q3 2013 EUR million Americas The Netherlands United Kingdom New Markets/ Holdings Total Income before tax (49) 274 14 (85) 154 Nominal tax rate 35.0% 11 25.0% (68) 23.25% (3) N/A 3 (57) Actual income tax 56 (84) 89 12
Slide 31: Disclaimer
Disclaimer Cautionary note regarding non-IFRS measures This document includes the 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 proportionate basis A