First quarter 2009 results Embedded Value 2008 Alex Wynaendts, CEO - PowerPoint PPT Presentation

First quarter 2009 results Embedded Value 2008 Alex Wynaendts, CEO May 14, 2009

Key messages o Executing on long term strategy and short term priorities o Earnings improved significantly in Q1 o Resilient profitable sales and deposits o Strong capital position o Embedded value per share of EUR 11.35 Local knowledge. Global power. 2

Execution of strategic priorities o Capital release of EUR 0.9 billion in Q1 2009 Capital o Target capital release of EUR 1.5 billion in 2009 o EUR 150 million cost measures in 2009 Costs o Approximately 1/3 realized in Q1 o Majority of additional EUR 3 billion core capital not used Contingency o Downsizing Institutional Markets Division (IMD) Portfolio review o Sale of life insurance activities in Taiwan Local knowledge. Global power. 3

Net loss due to capital market effects and impairments o Net income mainly impacted by financial markets Underlying earnings affected by lower capital markets – Impairments on bonds (EUR 320 million) and shares (EUR 66 million) – Under US GAAP, impairments would have been ~EUR 160 million lower – Tax benefits related to operating losses and tax exempt income – Underlying earnings to net income development in Q1 2009 (EUR million) ~(470) ~450 (22) (197) 173 (386) (23) 282 (173) Underlying Capital Underlying Fair value Gains on Impairment Other charges Income tax Net income earnings markets earnings items investments charges before capital impact before tax performance markets impact Local knowledge. Global power. 4

Equity market decline in Q1 has been reversed quarter-to-date o Accelerated amortization of DPAC and reserve strengthening take quarter- end equity market levels into account S&P index down 12% from 903 at year-end 2008 to 798 at March 31, 2009 – Fully reserved for S&P index level of 798 – Index rose quarter-to-date by 14% – S&P 500 index (January 1 – May 12, 2009) 950 908 900 850 800 750 700 April – May 12 Q1 2009 650 + 14% – 12% 600 12/31/2008 1/31/2009 2/28/2009 3/31/2009 4/30/2009 Local knowledge. Global power. 5

Relatively stable new life sales o New life sales of EUR 543 million Americas sales lower due to retail life and BOLI/COLI – Group pension sales in the Netherlands held up well, decline in retail life – Increased annuities sales in the UK, more than offset by drop in pensions – Strong new life sales in other countries – o New life sales relatively stable compared to Q4 2008 New life sales New life sales New life sales New life sales The Netherlands Americas United Kingdom Other countries (EUR million) (USD million) (GBP million) (EUR million) 262 205 182 71 41 62 291 289 265 56 58 50 Q1 08 Q4 08 Q1 09 Q1 08 Q4 08 Q1 09* Q1 08 Q4 08 Q1 09 Q1 08 Q4 08 Q1 09 * Excluding VA Europe Local knowledge. Global power. 6

Strong net deposits o Net deposits of EUR 1.1 billion* Growth driven by fixed and variable annuities – o Gross deposits of EUR 6.4 billion* Continued strong fixed annuities sales – Other countries higher due to inclusion of asset management JV in China and – European variable annuities Fixed (FA) and Variable Pensions & Asset Total gross deposits annuities (VA) Americas management Americas Other countries (USD million) (USD million) (EUR million) 459 2,328 2,120 FA 4,252 2,771 3,169 VA 974 747 780 234 394 706 Q1 08 Q4 08 Q1 09 Q1 08 Q4 08 Q1 09 Q1 08 Q4 08 Q1 09 * Excluding Institutional Guaranteed Products Local knowledge. Global power. 7

Resilient value of new business o Value of new business of EUR 201 million, up 8% VNB in Americas flat* – VNB in the Netherlands driven by margin improvement in mortgage business – Higher VNB in the UK driven by higher annuity sales and higher margins – Lower VNB in Other countries mainly driven by lower sales in Taiwan and CEE – o Internal rate of return of 17.8% Value of new business* Value of new business Value of new business Value of new business Americas The Netherlands United Kingdom Other countries (USD million) (EUR million) (GBP million) (EUR million) 97 154 98 12 13 31 40 50 52 42 36 33 Q1 08 Q4 08 Q1 09 Q1 08 Q4 08 Q1 09 Q1 08 Q4 08 Q1 09 Q1 08 Q4 08 Q1 09 * Excluding Institutional Guaranteed Products Local knowledge. Global power. 8

Solid progress on cost reduction Americas Netherlands United Kingdom o No wage increases o Reductions of contract o Restructuring IT, services marketing, customer o Staff reductions services o Process re-engineering o Deferred hiring o Cost containment o General cost savings o Reorganization o Savings in distribution o Agency distribution 1/3 realized in Q1 2009 cost savings target of EUR 150 million Local knowledge. Global power. 9

Capital position remains strong December 31, 2008 March 31, 2009 Insurance Group Directive EUR 5.6 billion ~EUR 4.6 billion (IGD) surplus capital (183%) (~170%) S&P risk-based insurance capital model excess capital EUR 2.9 billion EUR 2.7 billion above AA level o Decline in IGD surplus capital mainly due to Revaluation of bond portfolio in the Netherlands – • Risk free interest rates increased during Q1 Rating migration in US bond portfolio – Local knowledge. Global power. 10

Excess capital supported by pro-active capital management Excess capital development Q1 2009 (EUR billion) 2.9 (0.2) 0.3 2.7 (0.6) 0.6 (0.6) 0.3 Impact from capital markets : EUR 1.4 billion Q4 08 Excess Credit Rating Interest rates Capital De-risking Other Q4 Q1 09 Excess capital impairments migration US & equity preservation impacts capital market impact o Impact on earnings from capital preservation and de-risking in Q1 2009 of EUR 85 million per annum due to: Temporary investments in cash and treasuries – Lower alternative investment balances – o Earnings impact is not permanent as most de-risking measures are reversible Local knowledge. Global power. 11

US impairments Q1 2009 IFRS US GAAP EUR million ABS 133 CMBS - RMBS 72 Subtotal structured assets 205 Corporate – private 2 Corporate – public 91 Subtotal corporate 93 Commercial mortgage loans 27 Subtotal net credit impairments 325 Common equity impairments 5 Total recoveries -2 Total net impairments 328 ~170 Under IFRS, assets are impaired to market value. Under new US GAAP rules – as applied by US peers – impairments reflect expected economic losses Local knowledge. Global power. 12

Active portfolio management o Increased allocation to cash, treasuries and short term paper in US portfolio o Prudent to invest in low risk investments in periods of widening credit spreads o Run-off of institutional spread-based balances accelerates in 2H09 o Begin reinvestment in credit risk in select market segments Investments general account December 31, 2008 – EUR 130 billion March 31, 2009 – EUR 133 billion 2%2% 2% 3% 2% 2% 4% 3% 23% 25% „ Cash / Treasuries / Agencies „ Credits „ Structures assets 15% 16% „ Mortgages „ Equity like „ Real estate „ Policy loans „ Other 14% 13% 38% 36% Local knowledge. Global power. 13

Embedded value EUR 11.35 per share Δ constant Δ 2008 2007 EUR billion, except per share data currency Embedded value life insurance 22.9 25.9 (11)% (10)% Total embedded value (TEV) 18.5 21.7 (15)% (13)% TEV per common share* 11.35 13.44 (16)% (14)% Value of new business 0.8 0.9 (10)% (2)% Embedded Value Life Value of New Business Insurance 2008 2008 3% 5% 4% >1% 6% ƒ 11% Americas ƒ 9% Netherlands ƒ United Kingdom ƒ Asia 2% 45% ƒ Central & Eastern Europe ƒ Other European Countries ƒ 57% Americas International 25% 28% 5% * Adjusted for estimated theoretical value of the preferred shares Local knowledge. Global power. 14

Capital markets impact Embedded Value Life Insurance Embedded value life insurance movement (EUR billion) Capital markets impact (3.2) 0.9 0.8 25.9 (2.0) 22.9 EV operating return 0.5 (0.3) 0.4 EUR 1.7 billion 2007 Value of new Inforce Long term Change in Currency Other Capital 2008 business performance investment economic movements return assumptions variance Local knowledge. Global power. 15

Key messages o Executing on long term strategy and short term priorities o Earnings improved significantly in Q1 o Resilient profitable sales and deposits o Strong capital position o Total embedded value of EUR 18.5 billion o Fundamentals of our business remain strong Local knowledge. Global power. 16

Q&A For questions please contact: Greg Tucker Dick Schiethart +31 70 344 8956 gcc-ir@aegon.com Local knowledge. Global power. 17