1Q 2017 Results Alex Wynaendts Matt Rider The Hague – May 11, 2017 CEO CFO candidate Helping people achieve a lifetime of financial security
Overview 2 Highlights 1Q 2017 results • Underlying earnings up due to expense reductions and higher account balances • Solvency II ratio remains stable; capital generation of EUR 0.3 billion excluding market impacts and one-time items • Strong sales increase driven by higher UK platform deposits following the Cofunds acquisition Solvency II Earnings Return on equity Capital generation Sales € 488m € 0.3bn € 3.9bn 7.2% 157% +6% -0.1pp Stable +11% Excluding one-time items compared with 1Q 2016 compared with 4Q 2016 compared with 1Q 2016 compared with 1Q 2016 and market impacts Note: Earnings = underlying earnings before tax; Solvency II ratio is management’s best estimate
Earnings 3 Earnings up due to expense reductions and higher balances • Lower expenses as a result of strong execution on expense reduction program • Higher account balances in US and UK resulting in increased fee-based earnings • Adverse mortality experience in the US in line with seasonal expectation • Other mainly consist of lower performance fees in asset management and lower investment income in NL Underlying earnings before tax roll-forward (EUR million) 462 27 36 (14) (8) (15) 488 Underlying Lower Higher account Adverse mortality One-time Other Underlying earnings before expenses* balances experience items earnings before tax 1Q 2016 tax 1Q 2017 * At constant currencies, excluding the impact from acquisitions in the UK
Earnings 4 Expense reductions of EUR 350 million on track for 2018 Declining core operating expenses (EUR million – rolling 4 quarters ) 3,850 • Successful expense savings program drives reduction in core operating expenses 3,700 • Acquisitions in US and UK in key business lines 3,550 add to scale. Related cost synergies will be fully realized by year-end 2018 3,400 • Restructuring charges to reduce as expense 2015 1Q 16 2Q 16 3Q 16 2016 1Q 17 Core Acquisitions Restructuring charges reduction program matures • Netherlands and Holding expense reduction Cumulative run-rate savings since year-end 2015 target to be achieved in 2018, following Run-rate Remaining expense reductions ~160 ~190 increased project-related expenses in 2017
Earnings 5 Strong net income driven by favorable non-underlying earnings Underlying earnings to net income development in 1Q 2017 (EUR million) UEBT 1Q 2017 488 Loss from fair value items Loss was mainly driven by hedges which are in place Fair value items (53) to protect capital position Realized gains 76 Realized gains on investments Related to the sale of sovereign bonds in NL Net impairments (11) Other income 6 Net impairments Benign credit environment continues Run-off businesses 31 Income tax (159) Run-off businesses Result driven by one-off benefit in BOLI/COLI Net income 1Q 2017 378
Sales 6 Record revenue-generating investments of EUR 847 billion • Gross deposits up to EUR 34 billion mainly due to the Cofunds acquisition • Net outflows of EUR 6 billion mainly driven by the loss of one asset management contract in the UK related to the previous Guardian divestment • Revenue-generating investments up to EUR 847 billion, as a result of the inclusion of GBP 87 billion from Cofunds and favorable equity markets Gross and net deposits Revenue-generating investments (EUR billion) (EUR billion) 900 40 10 30 5 600 20 0 300 10 -5 0 -10 0 1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017 2013 2014 2015 2016 1Q 2017 Americas Europe Asset management General account Account for policy holders Third-party Asia Net deposits (rhs)
Sales 7 Creation of leading platform in the UK benefitting deposits UK platform assets & gross inflows (GBP billion) 15 #1 retail platform and #3 in workplace savings market Assets of GBP 102bn Servicing over 1.2 million customers on our platform, out of a total of 3 million 87 Aegon Cofunds 1.9 Leading position offers strong asset consolidation and cross-selling opportunities 1Q 2017 inflows GBP 7.3bn Cofunds replatforming expected to be completed in 2H 2018 5.4
Sales 8 Improving margin on new life sales • Lower sales driven by lower US term life and indexed universal life sales, the divestment of the UK annuity book and lower pension sales in NL partly offset by higher sales in Asia • Pricing discipline and higher interest rates lead to increased MCVNB • A&H sales were up resulting from higher NL disability insurance sales and a stronger US dollar New life sales and Life MCVNB margin A&H and general insurance (EUR million and %) (EUR million) 300 300 5% 4% 200 200 3% 2% 100 100 1% - 0% 0 1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017 1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017 New life sales (lhs) MCVNB margin (rhs) Accident & Health General
Capital 9 Solvency II ratio remains stable • Capital generation excluding market impacts and one-time items amounted to EUR 0.3 billion in 1Q 2017 • Market impacts mainly related to positive credit spreads and interest rate movements in the Netherlands • Positive impact from capital efficiency measures in Asia, largely offset by DTA non-admissibility in the US • Impact of Cofunds acquisition and 2016 final dividend as expected Group Solvency II ratio (EUR billion) ~157% +2% +2% (2%) (2%) ~157% OF OF OF 18.4 18.4 18.1 SCR SCR 11.7 11.5 4Q Capital Market impacts and 2016 Final Cofunds acquisition and 1Q 2016 generation one-time items dividend other 2017 Note: OF = Own funds; SCR = Solvency capital requirement
Capital 10 Update on NL capital position • Recognize need to improve Dutch solvency position • Downstreamed EUR 100 million from the Dutch holding into Aegon Leven in 1Q 2017 Dutch SII ratio • Dutch capital ratio would be impacted by potential lowering of UFR • Committed to decisive management actions - Risk profile improvements Management actions - Portfolio optimization - Group support • Progress of ongoing management actions Update at 2Q 2017 • Comprehensive plan to improve capital position
Strategy 11 Progress on financial targets Year-end Commitment 1Q 2017 results 2018 target Strong sales growth CAGR of 10% >10% Reduce operating expenses EUR 350 million EUR ~160 million Increase RoE 10% 7.2% EUR 1.0 – 1.5 billion Excess capital at Holding EUR 1.4 billion Return capital to shareholders EUR 2.1 billion EUR ~930 million Note: Return capital as of 1Q 2017 includes interim & full year 2016 dividend and share buyback; EUR 500 million of excess capital at the Holding is earmarked for the redemption of EUR 500 million senior notes due July 18, 2017
12 12 Appendix For questions please contact Investor Relations +31 70 344 8305 ir@aegon.com P.O. Box 85 2501 CB The Hague The Netherlands
Strategy support 13 Aegon at a glance Sales Focus Total sales of Life insurance, pensions & Asia € 3.9bn asset management for over (March 31, 2017) 26 million customers 2% Europe Americas 32% History Employees 59% Our roots date back to the Over 29,000 employees first half of the 19 th century (March 31, 2017) 7% AAM Earnings Underlying earnings before tax of € 488m Investments Paid out (2017 YTD) Revenue-generating in claims and investments € 847bn benefits € 59bn (March 31, 2017) (2016)
Financials 14 Americas: expense savings drive earnings increase • Underlying earnings increase to USD 333 million, as expense reductions and favorable equity markets more than offset adverse mortality experience and one-time items • Operating expenses declined by 7% as a result of continued execution on the expense savings program • New life sales decreased to USD 135 million due to lower indexed universal life and term life sales • Net outflows of USD 0.6 billion primarily due to lower retirement plan takeover deposits and lower VA sales Earnings Operating expenses New life sales Net deposits MCVNB $(0.6)bn $333m $448m $118m $135m +33% +7% -7% -15% n.m. compared with 1Q 2016 compared with 1Q 2016 compared with 1Q 2016 compared with 1Q 2016 compared with 1Q 2016 Note: Earnings = underlying earnings before tax
Financials 15 Europe: net deposits increase due to Cofunds acquisition • Underlying earnings remain stable at EUR 169 million • Operating expenses increased by 10% due primarily to the acquisitions in the UK • New life sales declined by 21% due to lower pension sales in NL as a result of the continued shift from defined benefit to defined contribution and the divestment of the annuity book in the UK • Net deposits of EUR 0.9 billion driven by strong UK platform growth as well as the inclusion of Cofunds Earnings Operating expenses New life sales Net deposits MCVNB € 169m € 395m € 0.8bn € 67m € 37m -34% stable +10% -21% +6% compared with 1Q 2016 compared with 1Q 2016 compared with 1Q 2016 compared with 1Q 2016 compared with 1Q 2016 Note: Earnings = underlying earnings before tax
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