Accelerate, connect, deliver Executing on our strategy Alex Wynaendts BoA-ML Banking & Insurance CEO Conference London – September 27, 2017 CEO Helping people achieve a lifetime of financial security
Overview 2 Overview • Transformed the profile of the company by focusing on fee and protection business Strong • Significant progress in optimizing portfolio • execution Maintained solid capital position • Management actions drive strong free cash flow growth • Broaden relationship with customers throughout their financial life cycle Clear • Expand in asset management, administration, and advice strategy • Significant investments in technology to offer a fully digitized service to our customers • Implement expense savings program of EUR 350 million Ambitious • Achieve return on equity of 10% targets • Return EUR 2.1 billion of capital to shareholders over 2016-2018
Key trends 3 Key trends are shaping our industry • Low interest rates combined with changing demographics Shift away from • New prudential regulation and increased capital requirements guaranteed life products • Rising demand for transparent products • Reduced social benefits and fiscal incentives Focus on • Increased awareness to save for retirement individual responsibility • Workplace channel increasingly important • Changing customer behavior in researching and purchasing products Increased importance • New technology creates increased transparency digital channels • More effective and efficient ways to advise and serve mass affluent customers
Focus on individual responsibility 4 Serving customers throughout their lives …to trusted provider of retail solutions …through guidance and advice… From worksite relationship… At & after retirement Retirees looking for Situation income and wealth transfer Wealth accumulation Situation Increasingly focusing Advice and asset Primary on retirement Working life management relationships Situation Developing career and Primary Asset management starting a family Aegon’s focus Offer guaranteed income and advice relationships and solutions to manage wealth Pension administration Primary Aegon’s focus Increase customer and protection relationships engagement and provide investment solutions Aegon’s focus Grow scale in administration and selectively offer protection products
Increased importance of digital channels 5 Introducing new platforms DIGITAL EXPERIENCE PLATFORM CUSTOMER EMPLOYER ADVISOR The Wealth + Health App: A simple Allow the Employer to manage their Allow the Advisor to manage their book and engaging platform for the employee benefits package and the of business and the financial fitness of Customer to aggregate accounts, progress of their participants on one their clients on one platform. receive guidance, and track wealth platform. and health goals. Driving engagement, acquisition, retention and consolidation of customer value 5
Increased importance of digital channels 6 Focused investments in FinTech Technology to enhance Investing in FinTech Benefits to Aegon customer experience • Improved user experience • Building life-long relationships with customers • Online advice & guidance • Developing new solutions & • Simplified transaction distribution models services • Excellent service at • Benefit from analytics & big competitive cost levels data
Shift away from guaranteed products 7 New business profile changed considerably • Shifted away from traditional life insurance to capital-light products - Traditional products less attractive due to low interest rates, changing demographics and higher capital requirements • Shift reflected in five-fold increase in gross deposits over the past 10 years Gross deposits * New life premiums (EUR billion) (APE, EUR billion) 2007 2007 3,3 21 2016 1,0 2016 100 * Excluding institutional guaranteed products
Shift away from guaranteed products 8 Significant shift to fee businesses Development of fee-based balances and earnings (Balances in EUR billion; underlying earnings in %) • 900 60% Strong growth in fee-based earnings; 817 percentage tripled to 45% since 2010 750 • Organic growth supplemented with 45% acquisitions to enhance growth; fee- 600 based balances more than doubled to EUR 675 billion 413 450 30% • Main focus on fee and protection 300 businesses 15% 150 0 0% 2010 2011 2012 2013 2014 2015 2016 1H 2017 Fee-based balances (lh) Other balances (lh) Fee-based earnings (rh)
Shift away from guaranteed products 9 Management actions drive quality of capital composition • Improved capital composition driven by growing core businesses, divestments and run-off portfolios • Growth of capital generation driven by growth of fee-based businesses Composition of required capital (In %) 10% 33% 90% 67% Non-core business* Core business 2010 2011 2012 2013 2014 2015 2016 2017E * Non-core business includes US run-off businesses & fixed annuities, and the UK annuity book
Capital 10 Solid capital position 185% • Improved Solvency II ratio at high-end of 150-200% capital target zone Solvency II ratio 149% Tier 1 • Quality of capital increased significantly as % of SCR AA- • Maintained strong credit ratings throughout past decade S&P rating Solvency II ratio and Tier 1 capital as per 2Q 2017; AA- financial strength rating with negative outlook, report dated May 26, 2017
Capital 11 Significant growth in free cash flows Management actions drive free cash flow growth (EUR million) Old 1 2018 2 Region • US capital generation stable at USD 1 billion Americas 3 ~900 ~850 after divestment of run-off businesses Netherlands 4 ~225 ~300 United Kingdom ~25 ~100 • Improved capital generation as a result of Asset Management ~100 ~100 management actions in the Netherlands, the UK Rest of Europe ~50 ~50 and Asia Asia ~(100) ~0 Normalized capital generation ~1,200 ~1,400 • Holding funding & Opex ~(300) ~(300) Normalized capital generation to further grow Normalized free cash flow ~900 ~1,100 in the medium term 1 As provided at BofA-ML Financials Conference in September 2016 2 Assuming interest rates move in line with forward curves, otherwise stable market conditions. Excluding one-time items and with SCR release at mid-point of target range 3 Based on 1.18 USD / EUR exchange rate for 2018, 1.10 USD / EUR for old guidance 4 UFR reduces by 15 bps in 2018, impact of EUR ~150 million; illiquid strain impact of EUR ~100 million in 2018
Balanced portfolio 12 Clear focus for each unit Complete transformation UK Optimize Transamerica Capture synergies EU US Achieve scale or divest EM LA Continue to grow AAM Accelerate growth Creating a balanced portfolio of businesses with predictable cash flows
Expense reductions 13 Expense reductions of EUR 350 million on track for 2018 Declining core operating expenses (EUR million – rolling 4 quarters ) 3.900 • Successful expense savings program drives reduction in core operating expenses 3.750 • Acquisitions in US and UK in key business lines add to scale. Related cost synergies will be fully 3.600 realized by year-end 2018 • Restructuring charges to reduce as expense 3.450 reduction program matures 2015 1Q 16 2Q 16 3Q 16 2016 1Q 17 2Q 17 Core Acquisitions Restructuring charges EUR 350 million expense reductions Run-rate Remaining expense ~160 reductions ~190 Cumulative run-rate savings since year-end 2015
Management 14 Experienced management team committed to deliver Functional heads Alex Wynaendts Matt Rider Allegra van Hövell-Patrizi Mark Bloom Carla Mahieu Onno van Klinken CEO CFO CRO CTO Global Head HR General Counsel Business unit heads Mark Mullin Marco Keim Adrian Grace Sarah Russell Americas Continental Europe United Kingdom Asset Management Majority of Management Board members joined in past two years
Capital return 15 Strategy delivers long-term value to shareholders • Interim dividend for 2017 of EUR 0.13 per common share • Paid a sustainable growing dividend for five consecutive years • Remittances support growing dividends and investments in strategic priorities Increasing dividends (EUR per share) 0.26 0.25 0.23 0.22 0.21 0,13 0,13 0,12 0,11 0,11 Final dividend Interim dividend 0,13 0,13 0.12 0,11 0,11 0,10 2012 2013 2014 2015 2016 2017 On track to return EUR 2.1 billion to shareholders over 2016-2018
Conclusion 16 Conclusion Transformed the company by focusing on fee and protection businesses Clear strategy to broaden relationship with customers Solid capital position Management actions driving free cash flow growth On track to return EUR 2.1 billion to shareholders over 2016 – 2018
Appendix 17 17 Appendix For questions please contact Investor Relations +31 70 344 8305 ir@aegon.com P.O. Box 85 2501 CB The Hague The Netherlands
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