3Q 2017 Results Alex Wynaendts Matt Rider The Hague – November 9, 2017 CEO CFO Helping people achieve a lifetime of financial security
Overview 2 Highlights of strong 3Q 2017 results • Underlying earnings increase driven by improved claims experience, higher fee revenue as a result of favorable markets, and lower expenses in the US • Return on equity improves to 8.9% reflecting strong net underlying earnings • Group solvency ratio increases significantly to 195%, as capital generation and the benefit from the divestment of the UK annuity book more than offset the interim 2017 dividend • Sales driven by record gross deposits resulting from growth of fee-based businesses Group solvency ratio Earnings Return on equity Capital generation Sales € 556m € 809m € 4.5bn 8.9% 195% +1.2pp +10pp +53% +20% Including one-time items and market impacts of € 485m compared with 3Q 2016 compared with 2Q 2017 compared with 3Q 2016 compared with 3Q 2016 Note: Earnings = underlying earnings before tax; Group solvency ratio is management’s best estimate
Earnings 3 Underlying earnings increase by 20% • Improved claims experience in Life and Health in the US and Dutch non-life business • Lower US expenses due to management actions as part of the cost savings program and favorable expense items • Favorable markets drive higher account balances resulting in higher fee-based earnings • Lower negative adjustment to intangible assets as a result of improved reinvestment yields Underlying earnings before tax roll-forward (EUR million) 461 40 20 33 10 (8) 556 Underlying Claims US expenses Favorable Intangible assets Other Underlying earnings before experience markets adjustment earnings before tax 3Q 2016 tax 3Q 2017
Earnings 4 Expense savings of EUR 350 million on track for 2018 Declining core operating expenses (EUR million – rolling 4 quarters ) • Continued execution of expense savings program 3,800 drives reduction in core operating expenses • Reduction in core operating expenses included 3,650 favorable expense items of EUR 20 million in 3,500 the quarter • Acquisitions in US and UK in key business lines 3,350 add to scale. Related cost synergies will be fully 3,200 realized by year-end 2018 2015 2016 1Q 2017 2Q 2017 3Q 2017 Core Acquisitions Restructuring charges Cumulative run-rate savings since year-end 2015 Run-rate savings Remaining savings ~170 ~180
Earnings 5 Strong net income Underlying earnings to net income development in 3Q 2017 (EUR million) UEBT 3Q 2017 556 Gain from fair value items Fair value items 159 Mainly from positive real estate revaluations and hedging gains from the US Realized gains 135 Net recoveries 4 Other charges (233) Realized gains on investments Run-off businesses (3) Mainly related to the divestment of an equity Income tax (149) investment in the US Net income 3Q 2017 469 Note: UEBT = underlying earnings before tax
Earnings 6 Impact of assumption changes and model updates Overview of Other income / (charges) (EUR million) • Charge in the US mainly driven by conversion Assumption Other Total & Models of largest block of UL business to new, Americas (304) (8) (312) dynamic model of which UL model conversion (252) Europe 125 (27) 98 - Allows for modelling policyholder behavior and Asia (19) - (19) other assumptions on a policy-by-policy basis - (1) (1) Asset Management • Assumption changes and model updates in Total Other income / (charges) (198) (35) (233) Europe mainly related to a release from the guarantee provision in NL No material recurring impact • Other mainly consists of impairment of on underlying earnings intangibles related to the announced sale of Aegon Ireland Note: Numbers may not add up due to rounding
Sales 7 Record gross deposits of EUR 41 billion • Gross deposits increased 65% to EUR 41 billion, primarily driven by exceptionally strong asset management deposits and strong institutional platform sales in the UK Asset management gross deposits benefited from a large mandate win by Aegon’s partner La Banque Postale - Asset Management, continued strong sales in the Dutch Mortgage Fund and the first inflows in Stap • Net outflows of EUR 0.6 billion were primarily the result of contract discontinuances in the retirement plan business acquired from Mercer in the US • Revenue-generating investments increased to EUR 816 billion compared to 2016 year-end due to acquisitions in the UK and growth of the business Gross and net deposits Revenue-generating investments (EUR billion) (EUR billion) 900 50 5 40 600 0 30 20 300 -5 10 0 -10 0 3Q 2016 4Q 2016 1Q 2017 2Q 2017 3Q 2017 2013 2014 2015 2016 3Q 2017 Americas Europe Asset management General account Account for policy holders Third-party Asia Net deposits (rhs)
Sales 8 Life sales impacted by exit from UK annuities • New life sales declined by 8% to EUR 202 million, driven by lower term and indexed universal life sales in the US as a result of Aegon’s focus on profitability and lower sales in the UK following the exit from annuities • New premium production for accident & health and general insurance decreased by 17% to EUR 180 million as product exits and lower supplemental health sales in the US more than offset higher sales in travel insurance - Travel insurance sales are expected to reduce significantly as of 1Q 2018 as part of the earlier announced strategic decision to exit the Affinity, Direct TV and Direct Mail distribution channels 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 3Q 2016 4Q 2016 1Q 2017 2Q 2017 3Q 2017 3Q 2016 4Q 2016 1Q 2017 2Q 2017 3Q 2017 New life sales (lhs) MCVNB margin (rhs) Accident & Health General
Capital 9 Excess capital temporarily decreases due to capital injection • Holding excess capital decreased temporarily to EUR 0.9 billion in 3Q 2017 following an injection of EUR 1 billion into Aegon the Netherlands • Regular dividends received during the quarter from the US of EUR 357 million and AAM of EUR 20 million • Divestment proceeds to be upstreamed by units in 4Q 2017 - UK dividend of GBP 150 million expected of which GBP 131 million received in October 2 - US dividend expected following sale of the majority of the run-off businesses Excess capital development (EUR billion) (0.5) 0.5 (1.0) (0.2) 0.4 1.7 0.9 2Q 2017 Holding Senior debt Senior debt Capital injection Dividends Expenses + 2017 3Q 2017 Holding excess capital redemption issuance into NL upstreamed interim dividend excess capital
Capital 10 Group solvency ratio increases to 195% • Capital generation of EUR 324 million excluding market impacts and one-time items of EUR 485 million • One-time items mainly related to model changes in US, NL, UK and the group - Model changes in units have a limited impact on capital generation in the near term - Benefit from model changes at group level does not impact capital generation • Strong capital ratios of main operating units; all at upper-end of respective target ranges Group solvency ratio (EUR billion and % of SCR) +4% +6% +2% +1% -3% 195% 185% OF OF Model changes 16.2 15.6 No material recurring impact on capital generation SCR SCR 8.7 8.0 2Q 2017 Capital One-time items and Completion UK Other Interim 2017 3Q 2017 generation* market impacts annuity divestment dividend Note: OF = Own funds; SCR = Solvency capital requirement * Capital generation excludes one-time items and market impacts
Strategy 11 Delivering on our commitments • USD 150m run-rate expense savings by year-end 2017 Americas • Improved profitability in Life & Health businesses • GBP 150m dividend from UK following completion of annuity book sale Europe • Positioned Dutch business to resume dividend payments to the group • Capital generation turned positive as a result of management actions Asia • Rolling-out new propositions to benefit from digital revolution • Deepening presence in existing markets and entering new ones Asset • Management Strategic partnerships contribute significantly to results and flows
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
13 13 Register? December 1 st Aegon office Please contact IR in the Hague +31 70 344 8305 ir@aegon.com Netherlands strategy update
Strategy support 14 Aegon at a glance Sales Focus Total sales of Life insurance, pensions & Asia € 12.3bn asset management for over (2017 YTD) 2% 26 million customers Europe Americas 32% History Employees 60% Our roots date back to the Over 29,000 employees first half of the 19 th century (September 30, 2017) 6% AAM Earnings Underlying earnings before tax of € 1,578m Investments Paid out (2017 YTD) Revenue-generating in claims and investments € 816bn benefits € 59bn (September 30, 2017) (2016)
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