1 Accelerate, connect, deliver Investor presentation May-June 2016 Helping people achieve a lifetime of financial security
Accelerate, connect, deliver 2 Story line Transformed the profile of the company by focusing on fee business Achievements Substantially improved the strength of our balance sheet since 2010 Doubled free cash flows after holding expenses Broaden relationships with our customers throughout their financial lifecycles Expand in asset management, administration and guidance & advice Priorities going forward Improve our performance by growing our business and reducing expenses Allocate capital to businesses that create value and cash flow growth Achieve a return on equity of 10% by 2018 Financial Reduce annual operating expenses by EUR 200 million by 2018 targets Increase capital return to shareholders: EUR 400 million share buyback and growing dividends
Accelerate, connect, deliver 3 Achievements and priorities Helping people achieve a lifetime of financial security
Achievements and priorities 4 Changed company profile While growing Result of executing on our strategy our fee business Optimized value Generated average annual of backbook sales growth of 12% since Addressed 2010 Realized material cost legacy issues savings in established Invested in digital business markets models Divested EUR 3.4bn Significantly reduced size of non-core activities at >0.8x Created highly successful run-off portfolio P/B on average asset manager Freed up capital from legacy Improved quality of our Secured distribution deals annuity businesses financial modeling and JVs with strong partners Optimized hedging of Addressed several Grew our pension customer financial market and long-dated disputes base from 6 to 11 million underwriting risks
Achievements and priorities 5 Maintained a strong capital position Allowing dividends to shareholders of EUR 1.4 billion since 2010 Solid group Solvency II ratio ~155%* Q1 2016 Robust balance sheet Strong ratings S&P AA- financial strength rating Operational free cash flow growth Growing Doubled free cash flows since 2010 cash flows Reduced holding expenses Growing cash dividends EUR 1.4 billion cash dividends since 2010 Return of capital Significant deleveraging Over EUR 2 billion debt reduction * Pro forma basis includes reinsurance of 2/3 of UK annuity book pre-Part VII transfer
Achievements and priorities 6 Aegon’s strategic priorities • • Offer solutions throughout the lifecycle EUR 200 million expense reduction program in US, NL and holding • Provide omni-channel distribution • Simplifying our business by digitizing • Expand guidance and advice processes and increasing capabilities self-service • Engage directly and connect digitally • Grow scale in asset management, with our customers administration and advisory services • • Allocate capital to businesses that Increase digital capabilities and create value and cash flow growth expertise to support growth • • Enhance value of backbooks Focus leadership on advocating ownership, agility and customer- • Achieve scale in New Markets centricity • Divest non-core businesses • Additions to management board reflect key strategic priorities
Achievements and priorities 7 Benefit from global trends Well positioned to capitalize on new trends and regulation Persistently low interest rates Shift from state and corporate benefits to individual responsibility for financial security Increased competition as a result of blurring boundaries in the financial services industry Reduced accessibility to traditional advice for mass customer segments Consumer demand shifting towards digital first, multi-channel access and personalized offerings Customers expect transparent, simple, superior service and fair products A tightened regulatory environment that increases complexity and reduces returns
Achievements and priorities 8 Serving customers throughout their lives Opportunity to provide products and services across the lifecycle …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
Achievements and priorities 9 Reducing expenses Achieving cost savings by simplifying our businesses …by simplifying Strong expense track Additional cost savings in 2016- 2018… record 2010-2015 the business • Expenses up only 1% per USD 150 million savings Reduce complexity year while growing sales by • Taking out management 8% per year * layers EUR 50 million savings Reduced expense base of • Straight-through processing insurance activities by ~20% or EUR 100 million • Customer self-service Stabilize cost at low level Expense base reduced by • Product simplification ~35% or GBP 100 million • Outsourcing since 2010 Note: Cost savings based on adjusted operating expenses. Total cost savings target of EUR 200 million includes cost savings at the holding * Percentages shown are compounded average growth rates for 2010 to 2015 year-to-date
Achievements and priorities 10 Strategically allocated capital Continue to increase capital to core businesses Optimized Portfolio Divest non-core business Enhance backbook value Optimize capital allocation • • • Divested UK annuity book Operationally separate UK Grow asset management backbook from platform earnings by another 20% by • Completed divestment of business 2018 commercial line non-life • • business in the Netherlands Rationalize US Achieve scale in emerging Accident & Health portfolios markets • Considering options for • • mortgage book in Hungary Optimize longevity hedging Transition from DB to DC in in the Netherlands the Netherlands • Further reduce capital • • allocated to US run-off Continue variable annuity Grow UK platform assets to businesses lump sum offering GBP 40 billion by 2018
Achievements and priorities 11 2018 financial targets Executing on our strategy Year-end Commitment Management actions 2018 target • Strong sales Sales driven by higher gross deposits in Retirement plans and CAGR of 10% growth Asset Management during Q1 • Completed voluntary separation plan in the Americas Reduce operating • EUR 200 million Holding and NL implementing cost savings expenses • Savings to begin second half of 2016 • Increase during Q1 due to higher net underlying earnings and Increase RoE 10% lower shareholder’s equity • EUR 200 million reduction in Q1 due to first tranche of SBB EUR 1.0 – 1.5 Cash • Capital contributions of EUR 100 million into growth areas buffer at Holding billion • Cash buffer at Holding was EUR 1.0 billion at end of Q1 2016 • EUR 400 million share buyback completed on May 19, 2016 Return capital • EUR 2.1 billion Vereniging Aegon sold EUR 58 million of Aegon shares to to shareholders maintain voting rights
Accelerate, connect, deliver 12 12 Capital update Helping people achieve a lifetime of financial security
Capital update 13 Capital management policy 140-170% target Solvency II range at Group level Group SII ratio EEA country units Opportunity Target: 130% – 150% SII Ratio 1 170% SCR Aegon Target Group 140% SCR Americas 350 – 450% life RBC Target* 2 US holding** -50% Caution SII equivalence @250% 120 – 160% 120% SCR Recovery Holding Cash buffer target 100% SCR 3 EUR 1.0 – 1.5 billion Regulatory Plan * Could be lowered if interest rates rise or RBC asset factors are increased ** Primarily impact of US holding companies, including US employee pension plan
Capital update 14 Solvency II ratio at ~155% Ratios mainly impacted by adverse market impacts Capital return to Q4 2015 Capital generation Market impacts Q1 2016 Other shareholders +2% ~155%* ~160% (6%) +5% (6%) • • • • Wider mortgage spread in NL Pro forma UK EUR 400 million share Capital generation annuity portfolio sale buyback excluding market • Credit ratings migration impacts and one- • • Other EUR 280 million proposed • Staff pension plans IAS 19 loss time items final 2015 dividend • Second order impacts of lower • Deducted from Solvency II interest rates (credit risk, longevity own funds when risk, volatility adjuster and risk management decision margins) made United States Netherlands United Kingdom* Local solvency ~480% ~135% ~140% ratio by unit RBC SII SII * Pro forma basis includes reinsurance of 2/3 of UK annuity book pre-Part VII transfer
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