Course of business and significant events in 2008 Alex Wynaendts, - PowerPoint PPT Presentation

Course of business and significant events in 2008 Alex Wynaendts, CEO & Chairman of the Executive Board Local knowledge. Global power. 1

Strategy update June 2008 Strategic priorities to improve performance Reallocate capital towards businesses with higher growth and 1 return prospects 2 Improve growth and returns from existing businesses 3 Manage AEGON as an international group Local knowledge. Global power. 2

Refocus towards businesses with higher growth and return prospects Capital allocation 5-10% Global businesses 10% 10% New markets* 15-25% 30% 35% 25-35% Western Europe 40-50% US 60% 40-50% 60% 55% 2007 2008 Target allocation 2012 * New markets = Central & Eastern Europe, Asia and Latin America Local knowledge. Global power. 3

Global financial turmoil affected the economy GDP growth expectations for 2009 1 (EUR million) Total US credit market debt/GDP 3 (%) � US � Euro zone 350 1.0% � UK 300 250 -1.0% 200 150 -3.0% 100 Jun Jul Aug Sep Oct Nov Dec Jan Feb 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2009 08 08 08 08 08 08 08 09 09 Equity markets 2 Credit spread gapping 2 Indexed level (December 31, 2002=100) Average corporate bond yields (%) 10 Y Treasury S&P 500 AAA AEX (Amsterdam) 8.0 AA 180 BBB FTSE 100 160 140 6.0 120 100 4.0 80 60 40 2.0 2003 2004 2005 2006 2007 2008 2009 Dec/02 Dec/03 Dec/04 Dec/05 Dec/06 Dec/07 Dec/08 1. Source: Consensus Economics Inc. 2008 2. Bloomberg 3. Total US credit market debt measured by the US Federal Reserve includes debt owed by domestic financial services firms, mortgages, corporate debt, federal government debt, small business debt, consumer debt, state and local government debt, and foreign debt Local knowledge. Global power. 4

Strong capital buffer required Financial markets o Volatility o Illiquidity Increased cost of capital & Maintaining less availability of capital o Closed capital markets strong capital Regulators buffer o Focus on capital remains key o Take a more Fungibility of capital restricted conservative stance Customers o Demand for guarantees Increase of required capital o Trust Local knowledge. Global power. 5

Execution of strategy under difficult circumstances CAPITAL FOCUS COST CONTINGENCY BUSINESS REVIEW Local knowledge. Global power. 6

Capital: EUR 1.7 billion of capital released in 2008 Americas United Kingdom o Transferring risk through reinsurance o Active risk reduction and o ViF securitization diversification: o Further improvements ALM – Investment risks – Optimization of asset and liability Netherlands management o Sale of risky investments – Securitization – Reinsurance transactions Other countries o Reinsurance of non-life catastrophic risk EUR 1.7 billion of capital released in 2008 through capital preservation and de-risking measures Local knowledge. Global power. 7

Cost: planned cost measures of EUR 150 million in 2009 Americas United Kingdom o Salary freeze o Operational changes to sourcing and IT o Staff reductions / deferred hiring: o Reorganization marketing and customer headcount reduction of ~560 services o Additional savings at various divisions o Headcount reduction of ~110 o Limited salary increases o Savings in distribution Netherlands o Return to 2007 cost base Other countries o Restructuring program in the o Cost containment but room for distribution business growth o Reduction in number of contract services o Limited salary increases Local knowledge. Global power. 8

Contingency: EUR 3 billion additional core capital structure Capital facility EUR 3 billion Public Market Vereniging AEGON Dutch State EUR ~89% of ~11% of 100% of EUR Non-voting securities common common preferred EUR 3 billion shares shares shares AEGON N.V. Local knowledge. Global power. 9

Contingency: EUR 3 billion additional core capital structure o Dutch State representation on AEGON Supervisory Board - Two seats granted - Formal appointment by Annual General Meeting of Shareholders - Membership of Audit, Compensation and Nominating Committees o State representatives approval required on certain decisions o AEGON maintains full discretion to determine dividend on common shares Local knowledge. Global power. 10

Business review: continuous assessment of business mix US Netherlands o Sale of real estate brokerage o New organizational structure o Downsizing of institutional spread based balances in the US Other countries o Closing down of car credit insurance o Sale of AEGON Taiwan Life Insurance o Merger of broker-dealers Canada o Strategic refocus of Canadian business Measures taken in line with long term strategy Local knowledge. Global power. 11

Despite market turmoil continued focus on execution of strategy o Enhanced position in pension markets Hungary and Poland o First step in fast-developing Turkish life insurance and pension market o Expanded footprint in Latin America with Brazilian life insurance joint venture o Presence in Spanish bank distribution channel extended o Continued roll-out across highly developed coastal provinces and new asset management joint venture in China o Launch of India life insurance and pension business Local knowledge. Global power. 12