Aegon UK strategy update Citi's European Insurance Conference London - PowerPoint PPT Presentation

1 Aegon UK strategy update Citi's European Insurance Conference London – January 8, 2019 Investor presentation Helping people achieve a lifetime of financial security

UK Strategy Update 2 Aegon UK at a glance • London Edinburgh Lytham Salford Peterborough Hove Witham Focusing on long £171 billion >3,000 term savings, Assets Under employees retirement, workplace Administration * savings and protection Award-winning multi- #1 Platform with >3.6 million channel investment >20% market share ** customers platform * As of June 30, 2018 pro forma for completion BlackRock Part VII ** Fundscape Q2 2018

Aegon UK‘s transformation from a UK Strategy Update 3 traditional to digital model is well underway… …with the strategy unchanged from 2015 Aegon UK 2020 Vision Completed In-progress  Split business into a ‘digital future’ & a ‘legacy  Split company into a ‘digital  Grow inorganically : past’ future’ and a ‘legacy past’ – Nationwide Integration  Grow capital-light , fee-based platform  Divested annuity book • Service customers to & through business providing customer solutions ‘to & retirement via multiple  Grew inorganically : through’ retirement via multiple distribution distribution channels channels and inorganic growth – Blackrock DC • Stabilising and Optimising  Provide market leading investment solutions – Cofunds Operations – Non-Nationwide IPS  Upgrade customers from heritage systems to – Institutional • Transition Upgrade programme digital platform business – Retail into BAU  Simplify the business and address our historic  Launched market leading • Execute the operational DAC position and selling annuities investment solutions outsource to ATOS for residual  Consider options for residual unit linked/with unit-linked/with profits business  Payment of regular dividends profits business Creating a 21 st century digital business that delivers customer-centric solutions Note: Book values as at end June 2018, DAC = Deferred Acquisition Costs, DC = Defined Contribution, IPS = Investment Portfolio Service, TPA – Third Party Administrator.

UK Strategy Update 4 Business model in place to grow capital light fee-based business Evolving business model Improving earnings trajectory 200 80% 2015 Platform 70% Unit Linked 150 60% Annuities 50% 100 Protection 40% 50 30% 20% 0 10% 2019 Investment -50 0% Platform 2015 2016 2017 2018 Digital Solutions Existing Business H1 18 Annualised (DS) (including Cofunds & BlackRock) W/Place Retail Direct H1 18 Annualised (EB) Fee business Unit Linked Protection (outsource to Atos)

UK Strategy Update 5 The Aegon UK strategy has not changed To continue to grow shareholder value Intermediary Market Leader – B2B(2C) AUA AUM Protection • • Primary driver of growth New opportunity • Optimise as cross-sell to advisers • Market leadership in the investment • Build and cross-sell OEIC • Digitise and embed into the platform platform market investment solutions • Nationwide platform & auto advice • Embed as adviser default solutions Growing the UK market • Leverage new Pension in ex- • Nationwide foundation client Cofunds from 2019 • Maintain Aegon ARC growth Inorganic growth • Workplace growth through leveraging BlackRock + Aegon • Workplace into ex-Cofunds advisers Scale • Key enabler of earnings growth • Relatively fixed cost base • Low operational variable cost through STP/ digital • Opportunity to further drive down unit costs and shared services charges

UK Strategy Update 6 A strong Aegon UK Executive and Management Team Executive Committee Executive Team Jim Ewing, James Crispin, Adrian Grace, Stephen McGee, CRO Chief Actuary* CEO CFO Digital Solutions Existing Business Management Teams Mark Till, Dougy Grant, MD Digital MD Existing Solutions Business Shared Services Transformation Gill Scott, James Mackenzie, Caroline Macefield, Ed Dymott, HRD General Counsel Chief Internal MD Innovation, Auditor* Transformation & Growth • Promoted to Global roles and recruitment ongoing. Additional Vacancy – Chief Technology Officer

Aegon UK well positioned to capitalize in UK Strategy Update 7 the UK market… …and are currently leading the platform market Aegon UK Participation Accessible Market - £3.7trn AUA Aegon currently participate in the following areas of the market: - Defined Contribution workplace pensions * - Individual private pensions - Stocks and Shares ISA Taxed savings – GIA *** - Assets are sourced from all segments (i.e. money comes out of Bank savings and goes into taxed, S&S ISA and Private Pensions) Aegon UK’s market opportunities • ~14% of stock on platform, ~86% is off platform ** • ~80% of new business flow is now on platform driven by advisers and migrating legacy assets • Market growth year on year is expected to be ~20% through 2021 Source: *NMG adviser survey, Platforum * Defined Contribution Pensions ** Defined Benefit Pensions *** General Investment Account Note Does not include any assumed impact from Brexit

Transforming Aegon UK’s market position… UK Strategy Update 8 …leveraging scale to deliver a multi-channel strategy Total AUA ~£171 billion at 30 June 2018 (including BlackRock) Total ~£58bn Total ~£36bn Total ~£57bn Total ~£10bn Total ~£8bn * 380,000 customers On Platform ~£40bn On Platform ~£22bn On Platform ~£57bn On Platform ~£10bn On Platform ~£8bn £32m API in 2017 Target Markets ** Key: Proposition Focus Customer Focus Distribution Focus Investments With clear positioning to achieve the our ambition ‘to transform Aegon and create the UK’s leading long term savings and investment business’ Banks/Building Institutional market #3 #1 Advisory & Workplace Significant Player Society (IPS); Direct market & Protection markets Source: Fundscape Five Year Platform Projections Jan 2017, Spence Johnson, Platforum; * Captures platform direct to customer only ** Investment Portfolio Service

Clear initiatives identified that will grow the UK Strategy Update 9 Aegon UK business Revenue Scale Current 2019 Delivery 2019 Development    Platform and omni-channel Complete Platform delivery Create new Decumulation distribution strategy has commitments (Institutional, products and propositions established Aegon as #1 Master Trust, Retail and NBS) (investments into retirement) platform provider   Implement Extended Making our business easier  Platform market share is Outsource Partnership of for distributers to connect to >20% and market growing (e.g. becoming “PayPal for Existing Business with Atos strongly (20% CAGR) Platform”)  Aegon investment solutions to  Maintaining #3 position in the  platform market Consider inorganic growth to Workplace Platform market achieve further scale  and growth driven by auto- Cross-sell Distribution model – AUM + AUA + Protection  enrolment & new business Future transformation agenda  BlackRock Part VII delivers formed  Cost synergies Workplace growth  Protection digitization –  Protection digitization - Phase 2 Phase 1 Cost Efficiency Realising the benefits of being the largest investment platform in the market

Aegon UK has delivered on key UK Strategy Update 10 milestones to date and remains on track Progress Integration Integration on Savings Actions Growth Levers  Retail - Cofunds Net flows ahead of plan and Aegon Retail  Remove overheads, immediate delivering double digit year on Achieved contract rationalization and year growth operating model alignment  Institutional – flows and project Cost on track Savings  Technology contract On Track £60m rationalization  Workplace - net business flows growing, particularly post  Operations straight through Part VII In Progress  Nationwide implementation – on processing track

Retail Recovery will move to Stabilize and UK Strategy Update 11 Optimize in 2019 Stabilize – 1H 2019 Best in Market – 2020> • • Active management of strong, sustainable SLA performance Embed Operational optimization to lower cost further • • Strengthen control environment Introduce new functionality to differentiate the proposition • Robust organisational model • Platform functionality strengthened Retail Recovery – 2H 2018 Optimize – 2H 2019 • • Returning to an acceptable level of Operation remodelling synergies customer service • Re-engineered processes to optimised operating model • Platform functionality repair • Strong continuous processes improvement • Deliver deferred new adviser and customer functionality