NEW PICTURE Simplification and growth Alex Wynaendts Bank of America Merrill Lynch Conference London – September 25, 2018 CEO Helping people achieve a lifetime of financial security
Simplification and growth 2 From a product manufacturer to a financial services provider …through guidance …to trusted provider From working life and advice… of retail solutions Protection Accumulation At & after retirement We protect what is important to We help our customers save We provide our customers with our customers, their families, and invest for the future retirement income, helping to their health and their homes meet costs of care and securing their families’ future To help people achieve a lifetime of financial security
Simplification and growth 3 On track to deliver on financial targets Run-rate annualized expense savings Cumulative capital return to shareholders Return on Equity (EUR million) (EUR billion) (%) EUR EUR 10% 10% 350m 1 2 2.1bn by 4Q18 300 200 5% 1 100 0% 0 0 2016 2017 1H 2018 2018 2016 2017 1H 2018 2018 2016 2017 1H 2018 2018 Target Target Target Of which TCS agreement Target 1 EUR 350 million consists of USD 300 million (EUR/USD 1.05), EUR 50 million from the Netherlands, and EUR 15 million from the Holding
Simplification and growth 4 Strong controls and global knowledge • Implementing strong control functions across the group - Stronger group oversight - Increased consistency and efficiency - Higher quality and predictability • Benefitting from global knowledge and scale in change programs - Working with partners, outsourcing certain functions - Investing in start-up fintech companies - Structural changes & modernization efforts
Simplification and growth 5 Simplification Growth 3 1 1 3 + Simplifying Growing Selective Simplifying 2 2 business fee-based in-market legal portfolio solutions acquisitions structures Simplifying Increasing back-office number of systems customers
̶ ̶ Simplification and growth 6 Simplifying and optimizing portfolio of business 1 Exited insurance Reduced capital allocated Protecting value of operations in 6 countries to US run-off businesses in-force businesses since 2014 • France • Exceed target of USD 1 billion • Expense saving programs reduction in allocated capital • Canada • Extensive hedging programs since 2015 • Mexico • Long-Term Care and • Divestments at 1x P/B on universal life rate increases • Ireland aggregate • Czech Republic BOLI/COLI and payout annuities • Slovakia Life reinsurance businesses
Simplification and growth 7 Simplifying back-office systems 2 • Administration of US life • Migrating administration • Completed several major and annuity businesses of PPIs and DC pension migrations related to from 26 systems to one products to market-leading Cofunds integration system of outsourcing TKP platform • Reviewing options for partner TCS • Exploring options for administration of • Completed consolidation migrating standardized traditional unit-linked of 3 legacy recordkeeping DB products portfolio systems in to a single retirement administration platform USD 100 million run-rate GBP 60 million expense Expenses per policy annualized expense savings savings from Cofunds become more variable from outsourcing integration
Simplification and growth 8 Simplifying legal structures – eliminating US VA captive 3 • Proposed NAIC VA framework aligns reserve movements with hedging and reduces non-economic volatility New VA capital framework eliminates need for captive; Aegon intends to merge VA captive with TLIC 1 - • Benefit from VA captive merger further strengthens Aegon’s capital position as a result of reserve releases and diversification benefits - 50%-points benefit to overall US RBC ratio, equal to USD ~1 billion one-time capital generation • Immaterial impact on recurring capital generation from merger in the next 10 years given long-dated nature of VA book Impact of key changes to US RBC ratio (in %-pts, 1H 2018 pro forma for key changes in 2H18 and 2019) -/-60% +50% 490% ~480% ~0% 450% Target Target 350% 1H18 RBC ratio Elimination VA captive Tax reform Early adoption new Pro forma 1H18 ratio VA framework 2 1 Transamerica Life Insurance Company; subject to the customary regulatory approval, 2 Intention to early adopt proposed changes in VA capital framework in 2019
Simplification and growth 9 Significant growth in fee-based solutions 1 Development of fee-based balances and earnings (Balances in EUR billion; underlying earnings in %) • 900 60% Gained market share in the US retirement 825 administration and UK platform market 750 • Six consecutive years of positive 45% net flows from external third-parties in 600 Asset Management • Profitable growth in variable annuities 413 450 30% driven by repricing capabilities and product design 300 • 15% Organic growth supplemented with acquisitions to enhance growth 150 0 0% 2010 2011 2012 2013 2014 2015 2016 2017 1H 2018 Fee-based balances (LH) Other balances (LH) Fee-based earnings (RH)
Simplification and growth 10 Increasing number of customers 2 Total number of customers (in millions) • Organic growth of customer base through development of new business models, 28.5 28.1 expanding distribution and introduction of 26.7 new products 25.2 • Investing in new technologies to improve the customer experience and drive product density and retention • Leveraging unique access to the workplace customer enabling Aegon to reach out to over 11 million customers • Selective inorganic growth delivering access to new customer base 2015 2016 2017 1H18
Simplification and growth 11 Selective inorganic growth 3 Adding scale Fee and protection businesses Significant scale added through acquisition of Recent bolt-on acquisitions have all been focused Mercer’s US defined contribution business and on fee and protection products, supporting growth Cofunds as well as expansion of the Santander of capital-light businesses. Robidus acquisition partnership with Banco Popular franchises expands Aegon the Netherlands’ position in the income protection value chain Track record of in-market acquisitions that support strategy Adding new capabilities Building on leading positions Acquisitions of Mercer’s US and BlackRock’s UK Focus on in-market acquisitions with a focus of defined contribution businesses add capabilities cementing leading positions, including in in large case segments. Robidus adds US retirement administration, UK platform and capabilities such as providing prevention and Dutch income protection market employee reintegration services
Simplification and growth 12 Conclusion On track to deliver on 2018 financial targets Established a strong foundation for future growth Focusing on disciplined group-wide capital allocation Increasing geographical diversification of remittances Sustainably growing dividends to shareholders
13 13 Hosted in December 6, Contact IR +31 70 344 8305 New York 2018 ir@aegon.com Analyst & Investor conference
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