Aegon Ltd. · EURONEXT:AGN
Aegon — Analyst & Investor Conference - London 2016
26 slides from Aegon's conference presentation, Jan 13, 2016
Slide 1: The Netherlands
The Netherlands Marco Keim Rutger Zomer CEO CFO Analyst & Investor Conference - London - January 13, 2016
Slide 2: Today's storyline
Today’s storyline • All financial targets have been met Achievements • Successful growth of fee-based businesses since 2010 • Strong growth of profitable residential mortgage business • Simplify and digitize products and processes leading to operational efficiency Priorities • Improve customer exper
Slide 3: Achievements on previous targets
Achievements on previous targets 3
Slide 4: All targets have been met
All targets have been met 2015 Target Delivery Key drivers • Margin on investments Stable RoC of ~8%* • Strict management on expenses, mainly related to the insurance business Stable earnings from 2010 • Growth fee based business Increase fee business • Especially driven by new initiatives • C
Slide 5: Progress made towards our strategic objectives since 2013
Progress made towards our strategic objectives since 2013 • Growth digital sales • Growth of Knab and • Cross-channel • Significant • Successful launch of TKP platforms distribution improvement on MijnAegon (currently • Launch of Dutch • Improving data engagement and ~750K customers) Mortgage Fund q
Slide 6: Challenges emerging
Challenges emerging 6
Slide 7: Challenges are emerging in a changing environment
Challenges are emerging in a changing environment Technological trends Market trends • New technologies enable more interaction • Increased competition as a with customers result of blurring boundaries • Customer data driving more relevant in the financial services propositions (products, services a
Slide 8: Priorities going forward
Priorities going forward 8
Slide 9: Executing on strategy
Executing on strategy • Capturing more of the value chain • Reduce expenses through sourcing and fulfill customer promise and digitizing across the business • Increase direct contact in omni- • Simplify products and processes channel distribution • More engagement from digital interaction and data i
Slide 10: Reducing expenses existing book by EUR 50 million
Reducing expenses existing book by EUR 50 million Expenses Life & Savings, Pensions & Non-Life Strategy for further EUR 50 million cost (in EUR milion) savings on existing book applies for following main categories: • Operations ~480 ~100 • IT ~20 ~400 ~50 ~350 • Support • Commerce costs 2010 Cost I
Slide 11: Distribution mix changes over time
Distribution mix changes over time Sales mix* • Total D2C sales to increase significantly (in %) from 2015 to 2018 mainly driven by sales of general insurance, as well as mutual 20 D2C 25% funds and Banksparen products through ~40 D2C 6 >40% Aegon Bank and Knab ~5 • Broker channel to remain the prim
Slide 12: Share of DC in sales mix to grow significantly
Share of DC in sales mix to grow significantly Life sales mix • Dutch pension market moving from defined benefit (DB) to (in %) defined contribution (DC) solutions – Preference corporate customers – Higher capital requirements for DB under Solvency II – Low interest rates ~1/3 • Growth of DC primari
Slide 13: Aegon Bank large driver for fee business growth in the Netherlands
Aegon Bank large driver for fee business growth in the Netherlands • Knab and mortgages contribute to fee business growth in the Netherlands and match both sides of the balance sheet with retail products • Increasing share of fee business from the Dutch mortgage fund • Extending fee business at Aego
Slide 14: Diversified funding supports strong mortgage origination capabilities
Diversified funding supports strong mortgage origination capabilities Nominal mortgage amounts per FY 2015 Comments (in EUR billion) Competitive advantages: Bank • Mostly short interest rate reset periods • Strong position with ~6* • Offering products to clients on both sides Independent Financial A
Slide 15: Cash and capital deployment
Cash and capital deployment 15
Slide 16: Solid Solvency II capital position
Solid Solvency II capital position • Year-end 2015 ratio estimated to be ~150% Solvency II SCR by risk type based on the approved partial internal model, (in %) which was granted early December of 2015 Credit risk • Remaining uncertainty is the extent of the loss- 15% Interest rate risk absorbing ca
Slide 17: Further reduction of longevity risk
Further reduction of longevity risk • Aegon absorbs longevity risk to help customers to manage the risk of outliving their assets The first longevity hedge transaction • Aegon aims to hedge was completed in 2012, covering a substantial part of its EUR 12 billion of liabilities trend risk through a c
Slide 18: Remittances to the group to be resumed in 2016
Remittances to the group to be resumed in 2016 Capital management zones • Aegon NL’s Solvency II ratio is estimated to be ~150% at Assessment of accelerated growth Opportunity and/or additional shareholder distribution year-end 2015, at the high 150% SCR end of the target range Capital deployment an
Slide 19: Solvency II sensitivities relatively limited
Solvency II sensitivities relatively limited • Analysis of capital position under Solvency II is always a combination of one-off impacts on the ratio as a result of market developments and consequences on economic earnings going forward • Mortgage spread risk is caused by the mismatch with the Volat
Slide 20: Drivers for OFCF movements
Drivers for OFCF movements • Main categories affecting Solvency II operational free cash flows - Risk adjusted spread and UFR unwind especially sensitive to changing market conditions - Release SCR existing book driven by run-off and trend DB to DC - New business investments could vary depending on
Slide 21: SII OFCF versus IFRS earnings
SII OFCF versus IFRS earnings • The Solvency II OFCF is expected to increase Estimated year-end 2015 comparison over the next 5-10 years (EUR billion) - Higher release of surplus from expiring DB contracts - New business shifts from DB to DC (and fee business 5.9 in general) - Optimize ALM 4.0 • Sol
Slide 22: Accelerating shift towards fee-based business in Dutch market
Accelerating shift towards fee-based business in Dutch market Management actions Delivering results Strong position Operational excellence in pensions • Reduce expenses by • Leverage pension leadership position EUR 50 million by 2018 • Simplify and digitize products and processes • Generate annual c
Slide 23: Appendix
Appendix 23
Slide 24: Update on legacy unit-linked book
Update on legacy unit-linked book Portfolio profile Actions taken Recent developments • 1.3 million unit-linked policies • Announced and implemented • Customer, political, media sold over EUR 0.9 billion and regulatory attention improvements remains • Majority of the ~600,000 Koersplan policies were
Slide 25: For questions please contact Investor Relations
For questions please contact Investor Relations +31 70 344 8305 [email protected] P.O.Box 85 2501 CB The Hague The Netherlands
Slide 26: Disclaimer
Disclaimer 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 assoc