Third quarter 2009 results Jan Nooitgedagt, CFO Media conference - PowerPoint PPT Presentation

Third quarter 2009 results Jan Nooitgedagt, CFO Media conference call November 12 2009 Media conference call, November 12, 2009

Key messages o Return to profit o Rep y ayment of EUR 1 billion o Further strengthened capital position o Revaluation reserves improve by EUR 3.3 billion in Q3 2009 o Profitable sales and net deposits, evidence of strong franchise Profitable sales and net deposits, evidence of strong franchise o Continued execution of strategy Local knowledge. Global power. 2

Return to profit o Net income improved as a result of – improved result on fair value items, due to rising financial markets, partly offset by equity hedging – substantially lower impairments on US housing market related assets – reversal of prior year tax charges Underlying earnings to net income development in Q3 2009 (EUR million) 351 (184) 126 (100) (285) 48 189 145 Total impact Fair Value items p EUR (58) million Underlying Underlying US equity US equity Other Other Gains/Losses Gains/Losses Impairment Impairment Other Other Income tax Income tax Net income Net income earnings hedging Q3 2009 fair value on investments charges before tax items Q3 2009 Local knowledge. Global power. 3

Underlying earnings impacted by exceptionals and de-risking o Exceptional items: – Provisions related to improvement of consistency of customer records in UK: EUR 43 million – Accelerated amortization of DPAC related to run off IMD: EUR 23 million o De-risking impact of EUR 40 million Underlying earnings before tax in Q3 2009 (EUR million) 351 66 417 40 Underlying earnings before Underlying earnings before tax excluding exceptional items and impact of de- risking Underlying Exceptional Underlying Impact of earnings earnings before 2009 items before tax tax pre- de-risking exceptionals Q3 09 Local knowledge. Global power. 4

Continued profitable sales, evidence of a strong franchise o US retail life sales up 11% o NL new life sales rose 63% o UK sales were stable o Net deposits* of EUR 2 billion more than double compared with Q2 09 o VNB of EUR 169 million impacted by lower contribution from the UK and Spain o IRR substantially exceeding hurdle rate New life sales Net deposits * Value of new business (EUR million) (EUR million) (EUR million) 181 169 469 857 1,980 Q2 09 Q3 09 Q2 09 Q3 09 Q2 09 Q3 09 * Excluding institutional guaranteed products Local knowledge. Global power. 5

Further reduced earnings sensitivity to equity markets Estimated impact on net income* (EUR million) Equity market Q3 2009 Q2 2009 Q1 2009 225 -20% +20% ‐ 250 275 ‐ 525 400 ‐ 900 ‐ 125 125 -10% +10% ‐ 225 150 ‐ 400 200 Estimated impact on capital* (EUR million) Estimated impact on capital* (EUR million) Equity market 450 ‐ 475 -20% +20% 20% +20% 425 425 ‐ 475 475 600 ‐ 700 ‐ 225 225 ‐ 225 225 -10% +10% ‐ 400 400 300 300 * Based on equity markets as of September 30, 2009 Local knowledge. Global power. 6

Cost saving measures target of EUR 150 million achieved o Cost savings target for 2009 achieved o Operating expenses* decreased by 5% YTD 2009 Operating expenses* (EUR million) 2,453 2,328 -5% Other Countries & Holding United Kingdom Netherlands Americas YTD 2008 YTD 2009 * Operating expenses at constant currency excluding restructuring charges and certain employee benefit expenses Local knowledge. Global power. 7

Excess capital supported by active capital management Excess capital development Q3 2009 (EUR billion) 3.5 (0.2) (0.2) 0.2 0.6 0.3 0.4 1.0 (0.6) 4.8 Capital preservation of EUR 0.9 billion Q2 09 Excess Credit Rating Interest rates Capital De-risking Statutory Equity Other Q3 Q3 09 Excess capital impairments migration US & equity effeciency earnings offering impacts capital market impact market impact Maintain larger capital buffer Maintain larger capital buffer Numbers may not add up due to rounding Local knowledge. Global power. 8

Successful capital release program Capital released (EUR billion) o Capital efficiency 4.2 – Ca. 60% of capital p preservation initiatives 0 3 0.3 – Generally no material earnings impact 0.6 1.6 – High RoC benefit 0.3 – More efficient use of capital without 0.4 meaningfully y chang ging g risk p profile 0 6 0.6 0.3 0.4 o De-risking 2.6 0.6 – Ca. 40% of capital preservation initiatives – Negative earnings impact, but partly 0.7 reversable – Neutral to negative RoC impact Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 T otal – Lowering capital requirements by lowering risk profile i k fil „ De-risking „ Capital efficiency Continue capital preservation actions t Local knowledge. Global power. 9

Strong improvement in revaluation reserves o Shareholders’ equity increased significantly as a result of improved revaluation reserves and the issuance of common shares o Improvement in revaluation reserves driven by narrowing credit spreads and lower risk-free interest rates Core capital* development Q3 2009 (EUR billion) 7.6 3.3 1.0 (0.3) 11.6 3.0 14.6 1.8 16.4 Q2 2009 Change in Equity offering Other Q3 2009 CCCS Core capital Revaluation Core capital shareholders' revaluation Changes** Shareholders’ Q3 2009 reserves excluding equity reserves equity revaluation reserves Q3 2009 * Core capital is the sum of shareholders’ equity and EUR 3 billion of convertible core capital securities ** Other changes includes net income, change in foreign currency translation reserve, coupons on perpetuals and other Local knowledge. Global power. 10

Continued execution of strategic priorities Reallocate capital towards businesses with higher growth and return prospects t t t t t t t o EUR 0.9 billion freed up in Q3 09 o Strong excess capital of EUR 4.8 billion o Continuation of capital preservation program Continuation of capital preservation program o Final approval to launch business in Japan Improve growth and return from existing business o EUR 150 million cost saving measures for 2009 already achieved o Operating expenses on comparable basis* decreased 5% in 9M 09 o Continued efforts to reduce costs Manage AEGON as an international company t o Global asset management business started o European data center in the UK opened o o Launch variable Launch variable annuity products in the Netherlands and Japan (Q4) annuity products in the Netherlands and Japan (Q4) Improve risk profile o 50% of equity exposure embedded in guarantees in the Netherlands hedged o Run-off of institutional spread-based business continued in Q3 09 o Exposure to credit derivatives reduced Local knowledge. Global power. * Operating expenses at constant currency excluding restructuring charges and certain employee benefit expenses 11

Key messages o Return to profit o Rep y ayment of EUR 1 billion o Further strengthened capital position o Revaluation reserves improve by EUR 3.3 billion in Q3 2009 o Profitable sales and net deposits, evidence of strong franchise Profitable sales and net deposits, evidence of strong franchise o Continued execution of strategy Local knowledge. Global power. 12