6-K

Securities and Exchange Commission

Washington, D.C. 20549

 

 

Form 6-K

 

 

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d/16

of the Securities Exchange Act of 1934

May 2015

 

 

AEGON N.V.

 

 

Aegonplein 50

2591 TV THE HAGUE

The Netherlands


Aegon’s press release, dated May 13, 2015, is included as appendix and incorporated herein by reference.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

    AEGON N.V.
    (Registrant)
Date: May 13, 2015     By   /s/ J.H.P.M. van Rossum
      J.H.P.M. van Rossum
     

Executive Vice President

Corporate Controller

 

 


LOGO

 

The Hague – May 13, 2015

Aegon reports first quarter 2015 results

 

¡   

Earnings impacted by adverse claims experience

 

   

Underlying earnings decrease to EUR 469 million as fee business growth and the stronger US dollar were more than offset by adverse claims experience in the US, higher surrenders in CEE and low interest rates

 

   

Hedging programs drive fair value loss of EUR 159 million

 

   

Net income amounts to EUR 316 million

 

   

Return on equity of 6.6% and 7.2% excluding capital allocated to run-off businesses

 

¡   

Record net inflows, favorable markets and currency effects boost asset base to EUR 638 billion

 

   

Record gross deposits of EUR 18.7 billion and net deposits of EUR 7.3 billion, driven by asset management, US retirement plans and NL retail savings

 

   

Life sales increase 20% to EUR 551 million, supported by higher universal life sales in US and Asia

 

   

Accident & health and general insurance sales 18% higher to EUR 329 million

 

   

Profitable sales with MCVNB of EUR 140 million despite lower interest rates

 

¡   

Solid capital position supported by strong cash flows

 

   

Solvency ratio increases to 216%; holding excess capital rises to EUR 1.4 billion

 

   

Gross leverage ratio improves to 27.8%, providing additional capital flexibility

 

   

Operational free cash flows excluding market impacts and one-time items of EUR 339 million

Statement of Alex Wynaendts, CEO

“Aegon reported disappointing underlying earnings this quarter, primarily due to adverse claims experience in the US. While the seasonal effect on claims was expected, both the number of claims and amounts were higher than anticipated. Net income was nevertheless solid, amounting to over EUR 300 million.

“I am pleased that we maintained the strong momentum in growing our business profitably, despite the persistent low interest rate environment. Moreover, the record sales that we achieved across the company highlight the trust we enjoy from a growing number of customers who are choosing Aegon to help them secure their financial futures.

“During the last quarter, we made substantial progress in executing our strategy and capitalizing on new distribution agreements. Looking ahead, we have every confidence that the actions we are taking across our businesses will further strengthen our growth prospects for the future.”

 

 

Key performance indicators

 

                                     
   
amounts in EUR millions    b)   Notes     Q1 2015     Q4 2014     %   Q1 2014     %
   

Underlying earnings before tax

    1        469         562       (17)     498       (6)
   

Net income

      316         399       (21)     392       (19)
   

Sales

    2        2,750         2,117       30      2,086       32 
   

Market consistent value of new business

    3        140         196       (29)     223       (37)
   

Return on equity

    4        6.6%        9.7%       (32)     8.4%      (21)

All comparisons in this release are against the first quarter of 2014, unless stated otherwise.

 

 

 

Media relations    Investor relations      
Marcel van Beusekom    Willem van den Berg      
+31 (0) 70 344 8572    +31 (0) 70 344 8305      
gcc@aegon.com    ir@aegon.com      

 

  


LOGO

 

STRATEGIC HIGHLIGHTS

 

¡    

Aegon’s online bank Knab wins prestigious international Celent Award

 

¡    

Venture fund providing insight into new industry-changing technologies

 

¡    

Aegon UK’s platform reaches 100,000 customers

Aegon’s ambition

Aegon’s aim to be a leader in all of its chosen markets is supported by four strategic objectives embedded in all Aegon businesses: Optimize portfolio, Deliver operational excellence, Enhance customer loyalty, and Empower employees. These provide the strategic framework for the company’s ambition to become the most-recommended life insurance and pension provider by customers and business partners, as well as the most-preferred employer in the sector.

Optimize portfolio

Aegon has agreed with its joint venture partners in India to increase its stake from 26% to 49%. The move follows a recent revision to India’s insurance laws that enables foreign companies to own up to 49% of insurance joint ventures. The transaction is subject to regulatory approvals. Aegon and its joint venture partners have operated a life insurance business in India since 2008, and have a leading position in the Indian online life insurance market.

In the Netherlands, Aegon has completed a thorough business review and will restructure its non-life business to focus exclusively on the retail and SME segments of the market, which includes property & casualty and disability insurance. Aegon will exit the proxy channel entirely and is considering strategic options for its commercial lines business. These actions are expected to result in improved non-life returns in the future.

Deliver operational excellence

Aegon is one of the first among its peers that launched a dedicated venture fund investing in start-ups developing new technologies for the financial sector. The fund size is EUR 100 million and working with these companies gives Aegon greater insights into new developments and helps Aegon play an active role in today’s rapidly changing environment.

Knab, Aegon’s innovative online bank in the Netherlands, was the first Dutch bank to win the prestigious international Celent Model Bank award. The Celent Model Bank Award is given in recognition of a company’s effective use of technology to meet customer needs. Knab’s popularity continues to grow, with an increase in the number of customers of over 40% during the quarter.

Enhance customer loyalty

Aegon enhanced its Alternative Lump Sum Offering (ALSO) program for customers in the United States who purchased certain variable annuity products with Guaranteed Minimum Income Benefits (GMIB). This program offers these customers a voluntary settlement option increasing their account value if they surrender. In the first quarter of 2015, customers received USD 0.2 billion of combined account value and ALSO benefit upon surrender.

In the Netherlands, Aegon has made significant improvements to its popular mobile application, which now allows customers to view their non-life insurance coverage, report claims and find nearby repair centers. In addition, Aegon has started a trial to allow its customers to include live video services from their mobile device when submitting damage claims. This is expected to reduce processing times, meaning an improved customer experience by helping to get customers the money they need quicker than ever.

 

   2


LOGO

 

In the United Kingdom, Aegon has upgraded over 20,000 customers to its platform in the first quarter of 2015, with more to follow. This is an important step in the development of the platform, as customers experience better service, lower fees and are able to take advantage of a number of retirement readiness tools offered exclusively on the platform. In early April, the total number of customers on Aegon’s platform surpassed the 100,000 mark.

Aegon Asia has launched a new customer relationship platform to support its fast-growing life insurance business in Hong Kong and Singapore. The new technology provides a simpler, more scalable platform which is helping Aegon get closer to its customers and provides the necessary tools to deliver an improved customer experience.

 

   3


LOGO

 

 

Financial overview

 

                                         
EUR millions   Notes     Q1 2015     Q4 2014     %     Q1 2014     %  
   

Underlying earnings before tax

             

Americas

      290         367         (21)        302         (4)   

The Netherlands

      131         172         (24)        129           

United Kingdom

      38         29         34         27         42    

New Markets

      51         33         54         61         (16)   

Holding and other

            (42)        (39)        (9)        (21)        (100)   

Underlying earnings before tax

      469          562          (17)        498          (6)   
   

Fair value items

      (159)        (132)        (20)        (116)        (37)   

Realized gains / (losses) on investments

      119         304         (61)        110           

Net impairments

      (11)        (28)        62         (8)        (39)   

Other income / (charges)

      (1)        (191)        100         (6)        86    

Run-off businesses

                   (3)               14         (43)   

Income before tax

      425          511          (17)        492          (14)   

Income tax

            (109)        (112)        3         (100)        (9)   

Net income

            316          399          (21)        392          (19)   
   

Net income / (loss) attributable to:

             

Equity holders of Aegon N.V.

      316         399         (21)        392         (19)   
   

Net underlying earnings

            344          429          (20)        370          (7)   
   

Commissions and expenses

      1,713         1,596                1,427         20    

of which operating expenses

    9        902         897                779         16    
   

New life sales

             

Life single premiums

      1,421         1,481         (4)        1,062         34    

Life recurring premiums annualized

            409         374                353         16    

Total recurring plus 1/10 single

      551          523          5          459          20     
   

New life sales

             

Americas

    10        141         169         (17)        116         22    

The Netherlands

      38         82         (54)        32         17    

United Kingdom

      268         194         38         249           

New markets

    10        105         76         37         62         68    

Total recurring plus 1/10 single

      551          523          5          459          20     
   

New premium production accident and health insurance

      307         205         50         261         18    

New premium production general insurance

            22         21                17         27    
   

Gross deposits (on and off balance)

             

Americas

    10        11,550         7,764         49         8,507         36    

The Netherlands

      1,563         989         58         486           

United Kingdom

      80         67         18         53         50    

New markets

    10        5,499         4,864         13         4,428         24    

Total gross deposits

            18,692          13,684          37          13,475          39     
   

Net deposits (on and off balance)

             

Americas

    10        4,404         (314)               1,978         123    

The Netherlands

      796         484         64         38           

United Kingdom

      42         34         26         28         53    

New markets

    10        2,276         591                (2,927)          

Total net deposits excluding run-off businesses

      7,518          794          -          (883)        -     

Run-off businesses

            (213)        (170)        (26)        (619)        66    

Total net deposits / (outflows)

            7,305          625          -          (1,502)        -     
           

 

Revenue-generating investments

 

                                         
            Mar. 31,
2015
    Dec. 31,
2014
    %     Mar. 31,
2014
    %  

Revenue-generating investments (total)

            637,599          558,328          14          481,624          32     

Investments general account

      172,504         153,653         12         138,567         24    

Investments for account of policyholders

      215,291         191,467         12         167,903         28    

Off balance sheet investments third parties

            249,804         213,208         17         175,154         43    

 

   4


LOGO

 

OPERATIONAL HIGHLIGHTS

Underlying earnings before tax

Aegon’s underlying earnings before tax in the first quarter of 2015 amounted to EUR 469 million. The main drivers for the 6% decline compared with the first quarter of 2014 were adverse claims experience, negative persistency and the negative impact related to lower than anticipated reinvestment yields in the United States and Asia (EUR 110 million), higher surrenders in Central and Eastern Europe (EUR 13 million) and the reduction in recurring earnings resulting from the assumption changes and model updates implemented in the third quarter of 2014 (EUR 25 million). These more than offset higher earnings resulting from growth in variable annuity, pension and asset management balances (EUR 39 million) and favorable currency movements (EUR 73 million).

Underlying earnings from the Americas were down to EUR 290 million. The positive impact on earnings as a result of growth in variable annuity and pension balances and the stronger US dollar were more than offset by the adverse experience described above.

In the Netherlands, underlying earnings increased to EUR 131 million. This was mainly driven by higher investment income and lower funding costs, which were partly offset by higher non-life claims.

Underlying earnings from Aegon’s operations in the United Kingdom were up 42% to EUR 38 million in the first quarter of 2015, which was the result of lower expenses and positive market movements.

Underlying earnings from New Markets declined to EUR 51 million. Growth at Aegon Asset Management, which was driven by an increase in third-party business, was more than offset by higher surrenders in Poland following product changes implemented in the fourth quarter of 2014 and divestments in France and Spain.

Total holding costs increased to EUR 42 million. This was primarily the result of higher net interest costs of EUR 7 million following a debt issuance to refinance a perpetual bond in the second quarter of 2014, the cost of which was previously directly accounted for through shareholders’ equity. In addition, higher Solvency II related expenses and the non-recurrence of a gain from interest on taxes of EUR 8 million recorded in the first quarter of 2014 also had a negative impact.

Net income

Net income amounted to EUR 316 million due to lower underlying earnings and a higher loss from fair value items.

Fair value items

The loss from fair value items amounted to EUR 159 million. This loss was mainly driven by hedging programs in the United States and interest rate swaps on perpetuals at the holding, which were impacted by a drop in the Dutch government rate and increased interest rate volatility. This was partly offset by gains related to interest rate volatility in the Netherlands.

Realized gains on investments

Realized gains on investments increased to EUR 119 million and were primarily related to hedge rebalancing in a low rate environment.

Impairment charges

Impairments remained low as a result of the favorable credit environment and amounted to EUR 11 million.

 

   5


LOGO

 

Other charges

Other charges totaled EUR 1 million. Charges in the Netherlands, which were primarily related to a restructuring provision for the non-life business of EUR 11 million, were mostly offset by charges for policyholder taxes in the United Kingdom.

Run-off businesses

The result from run-off businesses amounted to EUR 8 million.

Income tax

Income tax amounted to EUR 109 million in the first quarter. The effective tax rate on underlying earnings was 27%.

Return on equity

Return on equity was 6.6% in the first quarter of 2015, due to lower underlying earnings. Return on equity for Aegon’s businesses, excluding the run-off businesses, amounted to 7.2% over the same period.

Operating expenses

In the first quarter, operating expenses increased 16% to EUR 902 million, driven by a stronger US dollar, higher investments in technology-related initiatives, higher Solvency II costs and an increase in defined benefit expenses. At constant currencies, the increase was 4%.

Sales

In the first quarter of 2015, Aegon’s total sales were up 32% to EUR 2.8 billion, the result of a stronger US dollar and Aegon’s focus on growing profitable sales in variable annuities, pensions and indexed universal life products. Gross deposits increased 39%, driven by higher pension and variable annuity deposits in the United States, higher deposits in Aegon Asset Management and the strong growth of savings deposits at Knab in the Netherlands. Net deposits, excluding run-off businesses, improved to EUR 7.5 billion, due to higher inflows in all product categories. New life sales were up 20% to EUR 551 million, mainly due to increased sales of universal life products in the United States and Asia, and favorable currency movements. New premium production for accident & health insurance increased 18% to EUR 307 million, as a lower contribution from portfolio acquisitions was more than offset by higher supplemental health sales and a stronger US dollar.

Market consistent value of new business

The market consistent value of new business amounted to EUR 140 million. The positive effect of sales growth and product adjustments in the United States was more than offset by the negative impact of lower interest rates.

Revenue-generating investments

Revenue-generating investments increased 14% during the first quarter of 2015 to EUR 638 billion, driven by favorable market impacts, currency movements and net inflows.

Capital management

Shareholders’ equity increased EUR 3.1 billion compared with the end of the fourth quarter of 2014 to EUR 27.4 billion on March 31, 2015. This increase was mainly due to lower interest rates, which resulted in higher revaluation reserves, and favorable currency movements. The revaluation reserves were up by EUR 1.6 billion to EUR 9.9 billion. Aegon’s shareholders’ equity, excluding revaluation reserves and defined benefit plan remeasurements, increased to EUR 19.7 billion – or EUR 9.33 per common share – at the end of the first quarter. This increase was driven by net income generated during the quarter and favorable currency movements.

 

   6


LOGO

 

The gross leverage ratio improved to 27.8% in the first quarter, well within the target range of 26-30%. The further progress was driven by higher shareholders’ equity net of revaluation reserves and defined benefit plan remeasurements, as well as favorable currency movements. Excess capital in the holding increased to EUR 1.4 billion. The EUR 350 million proceeds of the divestment of La Mondiale Participation were partly offset by the effect of currency hedges, interest payments and operating expenses.

Aegon’s Insurance Group Directive (IGD) solvency ratio increased to 216% in the first quarter, mainly driven by earnings generated in the quarter. The capital in excess of the S&P AA threshold in the United States rose to USD 1.5 billion, due to tax benefits and earnings generated in the first quarter of 2015. In the Netherlands, the IGD ratio, excluding Aegon Bank, increased to ~235%, driven by a favorable impact of market movements. The Pillar I ratio in the United Kingdom, including the with-profit fund, declined slightly to ~135%, as the negative impact of downgrades in the investment portfolio more than offset earnings generated during the quarter.

Cash flows

Operational free cash flows were EUR 853 million in the first quarter of 2015. Excluding one-time items of EUR 273 million and market impacts of EUR 241 million, operational free cash flows amounted to EUR 339 million. The one-time items were primarily related to tax benefits in the Americas. The market impacts during the first quarter were mainly related to credit spread and interest rate movements in the Netherlands.

 

 

Financial overview, Q1 2015 geographically

 

EUR millions         Americas     The
Netherlands
    United
    Kingdom
    New
    Markets
   

Holding,

other

activities &

eliminations

    Total 

 

Underlying earnings before tax by line of business

             

Life

    33         81         20         (7)             127 

Individual savings and retirement products

    173                       (3)             170 

Pensions

    83         55         18                     159 

Non-life

           (9)               14             

Asset Management

                         45              45 

Other

                                (42)      (38)

Share in underlying earnings before tax of associates

                         (1)            

Underlying earnings before tax

    290          131          38          51          (42)      469  

 

Fair value items

 

 

 

 

(90)

 

  

 

 

 

 

151 

 

  

 

 

 

 

(22)

 

  

 

 

 

 

(4)

 

  

 

 

 

 

(193)

 

  

 

 

(159)

Realized gains / (losses) on investments

    (29)        140                            119 

Net impairments

    (4)        (5)               (2)             (11)

Other income / (charges)

           (22)        21                     (1)

Run-off businesses

                                    

Income before tax

    175          396          39          50          (235)      425  

Income tax

    (30)        (92)        (21)        (22)        57           (109)

Net income

    145          304          18          28          (178)      316  

 

Net underlying earnings

 

 

 

 

209  

 

  

 

 

 

 

101  

 

  

 

 

 

 

34  

 

  

 

 

 

 

29  

 

  

 

 

 

 

(29)

 

  

 

 

344  

 

 

Employee numbers

 

    

 

      Mar. 31,
2015

   

 

      Mar. 31,
2014

Employees

    27,824        28,602  

of which agents

    5,020       5,713 

of which Aegon’s share of employees in joint ventures and associates

    1,628       1,614 

 

   7


LOGO

 

AMERICAS

 

¡   

Underlying earnings down to USD 327 million mainly due to adverse claims experience

¡   

Net income of USD 163 million

¡   

Sales of life insurance flat at USD 158 million

¡   

Record gross deposits of USD 13.0 billion reflecting strong growth in pensions and variable annuities; net deposits, excluding run-off, increase 83% to USD 5.0 billion

Underlying earnings before tax

Underlying earnings from the Americas in the first quarter of 2015 amounted to USD 327 million. Higher earnings from growth in the variable annuity and pension balances, driven by both markets and net inflows, were more than offset by adverse claims experience and the negative impact related to lower than anticipated reinvestment yields in Life & Protection. The net negative impact of these items was USD 109 million in the first quarter of 2015.

- Life & Protection earnings amounted to USD 38 million. Earnings from life insurance amounted to USD 1 million. This included adverse mortality of USD 63 million, adverse persistency of USD 6 million and a negative impact of USD 21 million related to lower than anticipated reinvestment yields. Part of the unfavorable mortality was caused by normal seasonality; however, both frequency and severity of claims were higher than expected. Accident & health insurance earnings declined to USD 37 million, resulting from adverse claims experience of USD 27 million, the result of seasonality in supplemental health and higher claims in long-term care.
- Earnings from Investments & Retirement were up 8% to USD 288 million. Retirement plans earnings increased to USD 68 million, due to higher fee income from higher account balances. Variable annuity earnings increased 45% to USD 157 million, driven by higher fee income from higher account balances and a model adjustment of USD 26 million. Earnings from retail mutual funds amounted to USD 10 million, as a result of higher expenses. Fixed annuity earnings declined to USD 28 million, driven by the impact of continued balance reduction and asset portfolio changes resulting in an adjustment to the intangible balances of USD 18 million. Earnings from stable value solutions declined to USD 25 million, in line with lower account balances.
- Latin America contributed USD 1 million in underlying earnings for the quarter.

Net income

Net income from Aegon’s businesses in the Americas amounted to USD 163 million in the first quarter. The decline compared to first quarter of 2014 was driven by lower underlying earnings, a higher loss from fair value items and lower realized gains on investments.

Results from fair value items amounted to a loss of USD 102 million. Fair value hedges with an accounting match, which include the hedges on Aegon’s GMWB variable annuities, contributed a loss of USD 64 million, primarily caused by declining interest rates. The loss on fair value hedges without an accounting match under IFRS, which is primarily related to the macro hedge on the GMIB variable annuities block, was USD 43 million. Fair value investments amounted to a loss of USD 15 million, mainly driven by an underperformance of alternative investments in private equity. Other fair value items amounted to a gain of USD 19 million, mainly resulting from the increase in value of interest rate hedges.

Losses on investments of USD 33 million were primarily related to trading losses on debt securities, partly attributed to repositioning the portfolio within the energy sector. Impairments remained low at USD 4 million for the quarter, while the results of run-off businesses declined to USD 9 million.

 

   8


LOGO

 

Return on capital

In the first quarter of 2015, the return on average capital invested in Aegon’s business in the Americas, excluding revaluation reserves and defined benefit plan remeasurements, amounted to 5.5%. Excluding the capital allocated to the run-off businesses, return on capital amounted to 6.2%. The return on capital of Aegon’s businesses excludes the benefit of leverage at the holding.

Operating expenses

Operating expenses decreased 1% to USD 450 million, mainly due to the announced divestment of Canada. Excluding this divestment, expenses increased by 6% compared with the first quarter of 2014. This was driven by growth of the business, investments in technology and higher employee benefit expenses, the latter being partly related to the drop in interest rates.

Sales

New life sales were stable at USD 158 million, as growth in indexed universal life sales was offset by the announced divestment of Canada and the withdrawal of the universal life secondary guarantee product in response to the low interest rate environment. New premium production for accident and health insurance declined to USD 328 million, mainly resulting from a lower contribution from portfolio acquisitions. Excluding these acquisitions, sales were 4% higher than in the first quarter of 2014, driven by new distribution agreements for supplemental health and travel insurance products.

Gross deposits increased 12% to USD 13.0 billion. Gross deposits in retirement plans were up 12% to USD 9.3 billion, which was mainly due to higher recurring deposits, both from new plan participants and higher contributions resulting from the continued focus on retirement readiness. Gross deposits in variable annuities of USD 2.3 billion were up by 15% compared with the first quarter of 2014, largely due to continued focus on key distribution partners and expanding Aegon’s distribution through alternative channels. Gross deposits in variable annuities were down 17% from the fourth quarter of 2014, driven by the product adjustments implemented in the last two quarters in response to the low interest rate environment. Gross deposits in mutual funds increased 8% to USD 1.3 billion.

Net deposits, excluding run-off businesses, amounted to USD 5.0 billion in the first quarter. Net deposits for retirement plans were up 59% to USD 4.6 billion, driven by higher recurring gross deposits and lower contract discontinuances. In the first quarter of 2015, the asset retention rate was stable at 11%. This rate can vary on a quarterly basis, depending on the volatility of the outflow. Aegon remains on track to meet its 20% target in the medium term. Net deposits in variable annuities increased 3% to USD 1.0 billion, as higher gross deposits were partly offset by the outflows resulting from the successful launch of the enhanced ALSO program for the legacy GMIB block. Net outflows in mutual funds were USD 0.2 billion. Fixed annuities experienced net outflows of USD 0.5 billion due to the overall portfolio reduction as part of the strategic repositioning of the business.

Market consistent value of new business

The market consistent value of new business declined to USD 70 million in the first quarter of 2015, primarily driven by a lower contribution from variable annuities and life insurance products. This was the result of lower interest rates, which more than offset product adjustments to variable annuities implemented in the last two quarters.

Revenue-generating investments

Revenue-generating investments increased 3% to USD 392 billion during the first quarter. Investments for account of policyholders and off balance sheet investments for third parties were up by 4%, driven by net deposits as well as positive market movements. General account assets increased 2% during the quarter, as the decline in interest rates more than offset outflows from the run-off businesses and fixed annuities.

 

9


LOGO

 

Americas

 

                                                    

USD millions

    Notes           Q1 2015          Q4 2014          %         Q1 2014          %   
   

Underlying earnings before tax by line of business

                  

Life insurance

       1           68           (99)         75           (99)   

Accident & health insurance

             37           78           (52)         67           (44)   

Life & protection

       38           146           (74)         141           (73)   

Retirement plans

       68           76           (10)         61           12    

Mutual funds

       10           11           (9)         12           (12)   

Variable annuities

       157           145                   108           45    

Fixed annuities

       28           56           (50)         58           (52)   

Stable value solutions

             25           27           (6)         28           (8)   

Investments & retirement

       288           314           (8)         266             

Canada

       -           5                   4             

Latin America

             1           2           (57)         2           (62)   

Underlying earnings before tax

       327            467           (30)         414            (21)   
   

Fair value items

       (102)          (219)          54          (67)          (52)   

Realized gains / (losses) on investments

       (33)          12                   12             

Net impairments

       (4)          (26)          84          5             

Other income / (charges)

       -           (22)                  4             

Run- off businesses

             9           (4)                  19           (53)   

Income before tax

       197            208           (5)         387            (49)   

Income tax

             (34)          (20)          (68)         (86)          60    

Net income

       163            188           (13)         300            (46)   
             

Net underlying earnings

             235            336           (30)         290            (19)   
   

Commissions and expenses

       1,148           1,155           (1)         1,110             

of which operating expenses

             450           483           (7)         453           (1)   
   

New life sales

    10                    

Life single premiums

       44           114           (61)         66           (33)   

Life recurring premiums annualized

             154           204           (24)         152             

Total recurring plus 1/10 single

       158            215           (26)         158              
   

Life & protection

       149           181           (18)         134           12    

Canada

       -           21                   16             

Latin America

             9           12           (27)         8           10    

Total recurring plus 1/10 single

       158            215          (26)         158              
   

New premium production accident and health insurance

             328           240           37          338           (3)   
   

Gross deposits (on and off balance) by line of business

    10                    

Life & protection

       2           2           28          2           (13)   

Retirement plans

       9,284           5,279           76         8,288           12    

Mutual funds

       1,310           1,462           (10)         1,210             

Variable annuities

       2,340           2,819           (17)         2,038           15    

Fixed annuities

             80           81           (1)         71           13    

Investments & retirement

       13,014           9,642           35          11,607           12    

Canada

       -           28                   36             

Latin America

             3           5           (33)         5           (29)   

Total gross deposits

             13,019            9,676            35          11,651            12    
   

Net deposits (on and off balance) by line of business

    10                    

Life & protection

       (12)          (11)          (17)         (10)          (26)   

Retirement plans

       4,598           506                   2,887           59    

Mutual funds

       (166)          187                   226             

Variable annuities

       1,011           1,679           (40)         982             

Fixed annuities

       (466)          (535)          13          (686)          32    

Stable value solutions

             -           (2,339)                  (603)            

Investments & retirement

       4,977           (502)                  2,806           77    

Canada

       -           (59)                  (90)            

Latin America

             -           3           (99)         3           (99)   

Total net deposits excluding run-off businesses

       4,965            (568)                  2,709            83    

Run-off businesses

             (240)          (197)          (22)         (848)          72    

Total net deposits / (outflows)

             4,725            (766)                  1,862            154    
                          

Revenue-generating investments

                                                    
                                                      
         Mar. 31,          Dec. 31,             Mar. 31,         
         2015          2014          %         2014          %   

Revenue-generating investments (total)

             391,892            379,914                    371,958              

Investments general account

       103,381            101,067                    106,391            (3)   

Investments for account of policyholders

       113,699            110,287                    105,760              

Off balance sheet investments third parties

             174,811            168,561                    159,808              

 

10


LOGO

 

THE NETHERLANDS

¡    

Underlying earnings before tax up to EUR 131 million from higher investment income

¡    

Net income increases to EUR 304 million, due to a higher result from fair value items

¡    

New life sales up to EUR 38 million driven by higher recurring premiums in pensions

¡    

Non-life business to focus on retail customers following restructuring

¡    

Pension administration customer base increased by 900,000 to 2.8 million

Underlying earnings before tax

Underlying earnings from Aegon’s operations in the Netherlands increased to EUR 131 million. This increase was mainly driven by higher investment income and lower funding costs, which were partly offset by higher non-life claims.

 

Earnings from Aegon’s Life & Savings operations in the Netherlands increased 11% to EUR 81 million. This was the result of higher investment income, primarily generated by profitable mortgage production, and lower funding costs.

 

Earnings from the Pension business increased to EUR 55 million, driven by favorable one-time mortality adjustments of EUR 7 million.

 

The loss from the non-life business amounted to EUR 9 million, which was driven by a continuation in the high level of claims in the proxy channel and commercial lines. Due to the lack of improvement in these areas, Aegon has taken the decision to restructure its non-life activities and will now exclusively focus on the profitable retail and SME segments going forward, which includes both property & casualty and disability insurance. Aegon will exit the proxy channel entirely, which is expected to be finalized by year-end 2015. In addition, Aegon is considering strategic options for its commercial lines business.

 

Earnings from the distribution businesses were stable at EUR 4 million, as lower margins were offset by cost savings.

Net income

Net income from Aegon’s businesses in the Netherlands more than doubled to EUR 304 million. Results on fair value items amounted to EUR 151 million. This was primarily caused by interest rate volatility movements, partly offset by fair value movements on interest rate hedges. Realized gains on investments totaled EUR 140 million and were the result of hedge rebalancing in a low rate environment. Impairments amounted to EUR 5 million. Other charges amounted to EUR 22 million and included a EUR 11 million charge for the restructuring of the non-life business.

Return on capital

The return on average capital, excluding revaluation reserves and defined benefit plan remeasurements, invested in Aegon’s businesses in the Netherlands was 11.4%. Return on capital of Aegon’s businesses excludes the benefit of leverage at the holding.

Operating expenses

Operating expenses increased 13% to EUR 210 million, which included a charge of EUR 11 million related to the restructuring of the non-life business. Excluding this charge, expenses were up 8% compared with the first quarter of 2014. This was mainly due to investments to support the growth of the pension administration business and new ventures, such as Knab, and higher employee benefit plan expenses as a result of the low interest rate environment.

Sales

New life sales were up 17% to EUR 38 million in the first quarter. Pension sales increased to EUR 25 million, mainly driven by higher production from recurring premium contracts for both defined benefit and defined contribution products. Individual life sales were stable at EUR 12 million.

 

11


LOGO

 

In the first quarter, Aegon’s pension administration unit TKP took over the administration of the retail industry’s pension fund. This increased TKP’s customer base by over 900,000 to 2.8 million, making it the second largest provider of pension administration services in the Netherlands.

Gross deposits more than tripled to EUR 1.6 billion, which was mainly the result of the continued strong performance of Knab, Aegon’s online bank in the Netherlands. Knab accounted for EUR 1.1 billion of deposits in the first quarter, up from EUR 107 million in the first quarter of 2014. Knab continued to achieve a very high customer growth in the first quarter, which is supported by very high customer satisfaction scores. PPI deposits continued to grow strongly as well, driven by Aegon’s attractive and market leading product offering.

Production of mortgages in the first quarter of 2015 increased 8% to EUR 1.2 billion, of which EUR 0.8 billion was related to third-party investor demand. Premium production for accident & health and general insurance declined slightly to EUR 12 million.

Market consistent value of new business

The market consistent value of new business in the Netherlands increased 4% compared to the first quarter of 2014 to EUR 40 million. This increase was primarily driven by recurring pension premium contracts.

Revenue-generating investments

Revenue-generating investments amounted to EUR 87 billion, up 6% compared with the previous quarter due to net inflows and positive market impacts.

 

12


LOGO

 

The Netherlands

 

                                               

EUR millions

     Notes             Q1 2015             Q4 2014         %             Q1 2014         %   
   

Underlying earnings before tax by line of business

                   

Life and Savings

        81          102          (20)         73          11   

Pensions

        55          58          (5)         50            

Non-life

        (9)                 -                     

Distribution

                              86                  (6)   

Underlying earnings before tax

        131           172           (24)          129             
   

Fair value items

        151          61          147          (36)           

Realized gains / (losses) on investments

        140          248          (43)         84          68   

Net impairments

        (5)         (5)                 (2)           

Other income / (charges)

              (22)         (99)         78          (3)           

Income before tax

        396           377           5           172             130    

Income tax

              (92)         (105)         12          (29)           

Net income

              304           272           12           143           112    
   

Net underlying earnings

              101           123           (18)          100             
   

Commissions and expenses

        275          210          31          254            

of which operating expenses

              210          152          38          185          13   
   

New life sales

                   

Life single premiums

        257          658          (61)         260          (1)   

Life recurring premiums annualized

              12          16          (28)                 93    

Total recurring plus 1/10 single

        38           82           (54)          32           17    
   

Life and Savings

        12                    129         12            

Pensions

              25          77          (67)         20          25    

Total recurring plus 1/10 single

        38           82           (54)         32           17    
   

New premium production accident and health insurance

  

                     -                     

New premium production general insurance

                        16                  (8)   
   

Mortgages production

              1,179           847           39           1,087           8   
   

Gross deposits (on and off balance) by line of business

                   

Life and Savings

        1,537          968          59          486            

Pensions

              26          21          26                    

Total gross deposits

              1,563           989           58           486           -     
   

Net deposits (on and off balance) by line of business

                   

Life and Savings

        770          463          66          38            

Pensions

              26          21          26                    

Total net deposits / (outflows)

              796           484           64           38           -     
                 

 

Revenue-generating investments

 

 

                                 
         
 
Mar. 31,
2015
  
  
    
 
Dec. 31,
2014
  
  
     %        
 
Mar. 31,
2014
  
  
     %   

Revenue-generating investments (total)

              86,969           81,974           6           74,182           17    

Investments general account

        55,747          51,898                  46,652          19   

Investments for account of policyholders

        30,380          29,209                  26,555          14   

Off balance sheet investments third parties

              843          868          (3)         974          (14)   

 

   13


LOGO

 

UNITED KINGDOM

 

¡    

Underlying earnings before tax up 27% to GBP 28 million

 

¡    

Platform assets reach GBP 3.8 billion, net inflows triple to GBP 0.9 billion

 

¡    

25,000 direct customers added to Retiready; over 100,000 customers on platform

 

¡    

Operating expenses down 18% to GBP 64 million

 

¡    

Retirement income solution launched, guaranteed drawdown product to follow in the second quarter of 2015

Underlying earnings before tax

Underlying earnings before tax from Aegon’s operations in the United Kingdom in the first quarter increased 27% to GBP 28 million. This was driven by lower expenses and positive market movements.

 

- Earnings from Life declined to GBP 14 million, which was the result of selective de-risking of the investment portfolio to better align with Solvency II requirements.

 

- Earnings from Pensions increased to GBP 14 million, primarily driven by lower expenses, and positive market movements.

 

- Fee revenues amounted to GBP 111 million. Fee revenues from the platform were up 15% in the first quarter compared to the fourth quarter of 2014, due to the strong increase in assets under administration.

Net income

Net income declined to GBP 13 million, due to lower realized gains and a higher loss on fair value items. The loss on fair value items of GBP 17 million resulted from unrealized losses on equity hedges to protect the capital position and a charge relating to investments in inflation-linked bonds caused by a fall in inflation. Aegon invests in inflation-linked bonds as these provide an economic hedge for a part of its liabilities. This charge will therefore be offset over time when the lower inflation rate is reflected in Aegon’s annuity liabilities.

Customers

During the first quarter of 2015, Aegon gained approximately 50,000 new customers. Growth of the platform accelerated as planned, driven by Aegon’s unique single platform offering for the three market segments Workplace, Advisor and Direct. Aegon upgraded over 20,000 customers to the platform in the first quarter of 2015, with more to follow. The total number of customers on Aegon’s platform surpassed the 100,000 mark in early April.

In anticipation of the launch of the new pension changes in April Aegon launched the Your Retirement Planner site and planning tool in February, to help customers understand the options available to them in the new regulatory environment.

In the second quarter, Aegon will launch its guaranteed pension drawdown product, which builds on the expertise available within Aegon’s variable annuities business in the United States. This is in response to the recent regulatory changes that have given customers more flexibility when they retire. Aegon expects this product to play an important role in the at retirement market, due to the combination of providing lifetime income at a minimum guarantee.

Sales

The net inflow on Aegon’s platform more than tripled to GBP 0.9 billion. As a result, total assets on the platform grew to GBP 3.8 billion at the end of first quarter of 2015. The average policy size of new individual policies on the platform, including ones that have chosen to upgrade, is approximately GBP 68,000, more than double the amount for the traditional book of pensions and bonds.

 

   14


LOGO

 

Total assets under management for the drawdown product on the platform more than doubled in a year and was up 20% from the fourth quarter of 2014.

Total new life sales declined slightly to GBP 199 million, primarily driven by lower volumes arising from auto-enrollment.

Regulation

The fee caps for auto-enrollment business announced by the Department for Work and Pensions (DWP), came into effect from April 1, 2015. Most of Aegon’s customers opted to retain the commission model until April 2016, which means that the benefit from lower commission payments on Aegon’s operating free cash flow and the impact on underlying earnings will be postponed.

Aegon expects that the liberalization of pensions rules that came into effect in April 2015 will result in higher outflows from its back book. This is expected to be caused by an increased level of lapses and claims for the remainder of the year, although actual levels of outflows are difficult to predict.

Return on capital

The return on average capital invested in Aegon’s businesses in the United Kingdom, excluding revaluation reserves and defined benefit plan remeasurements, was 3.8% in the first quarter of 2015.

Operating expenses

Operating expenses declined 18% to GBP 64 million, driven by the reduction of business transformation costs and cost reduction programs.

Market consistent value of new business

The market consistent value of new business in the UK increased to GBP 6 million. This was driven by an improvement in the contribution from pensions, due to a rise in the share of higher margin asset consolidation in the new business mix in the first quarter.

Revenue-generating investments

Revenue-generating investments increased 7% to GBP 63 billion during the first quarter, driven by positive market effects.

 

   15


LOGO

 

United Kingdom

 

                                               

GBP millions

     Notes             Q1 2015             Q4 2014         %             Q1 2014         %   
   

Underlying earnings before tax by line of business

                   

Life

        15          20            (28)         18            (18)   

Pensions

              14                  -                   -     

Underlying earnings before tax

        28           22           26           22           27     
   

Fair value items

        (17)                 -           (2)         -     

Realized gains / (losses) on investments

                33          (96)         13          (90)   

Net impairments

                        -                   -     

Other income / (charges)

     5         15          (30)         -           (3)         -     

Income before tax

        29           26           10          30           (5)   

Income tax attributable to policyholder return

              (15)         (13)         (19)         (5)         -     

Income before income tax on shareholders return

        13           13                   25           (48)   

Income tax on shareholders return

                      14                  (2)         91   

Net income

              13           27           (52)          23           (44)   
   

Net underlying earnings

              25           36           (29)          21           21     
   

Commissions and expenses

        132          185          (29)         144          (9)   

of which operating expenses

              64          117          (45)         77          (18)   
   

New life sales

     6                    

Life single premiums

        394          323          22         454          (13)   

Life recurring premiums annualized

              160          120          34         161          -     

Total recurring plus 1/10 single

        199           152           31          206           (3)     
   

Life

        12          12          (1)         14          (11)   

Pensions

              187          140          34          193          (3)   

Total recurring plus 1/10 single

              199           152           31          206           (3)     
   

New premium production accident and health insurance

                                        -     
   

Gross deposits (on and off balance) by line of business

                   

Savings

              59          53          12         44          35   

Total gross deposits

              59           53           12          44           35     
   

Net deposits (on and off balance) by line of business

                   

Variable annuities

        (15)         (17)         13         (17)         12   

Savings

              47          44                  40          16   

Total net deposits / (outflows)

              31           26           19          23           37     
   

Platform assets under administration (balance end of period)

              3,798           2,746           38          1,562           143     
                 

 

 

Revenue-generating investments

 

                                               
               
 
Mar. 31,
2015
  
  
    
 
Dec. 31,
2014
  
  
     %        
 
Mar. 31,
2014
  
  
     %   

Revenue-generating investments (total)

        62,899           58,912                   57,453           9     

Investments general account

        10,549          9,872          7         9,084          16   

Investments for account of policyholders

        51,844          48,650          7         48,091          8   

Off balance sheet investments third parties

              506          391          30         277          83   

 

   16


LOGO

 

NEW MARKETS

 

¡    

Underlying earnings of EUR 51 million; strong results in asset management more than offset by higher surrenders in CEE and divestments

¡    

Net income amounts to EUR 28 million

¡    

New life sales up to EUR 105 million, mainly due to increased sales in Asia

¡    

Gross deposits increase 24% to EUR 5.5 billion, driven by higher UK absolute return fund sales and continued success of Dutch mortgage fund

Underlying earnings before tax

In the first quarter of 2015, Aegon’s underlying earnings before tax from New Markets decreased to EUR 51 million as a result of lower earnings in Central & Eastern Europe and the divestments in France and Spain.

- Earnings from Central & Eastern Europe (CEE) decreased to EUR 5 million due to increased surrenders in Poland following Aegon’s decision last quarter to cancel back-end loaded fees on unit-linked policies, which had an impact of EUR (13) million. However, surrenders during the first quarter decreased throughout the quarter as a result of measures taken to improve retention. Excluding the impact of increased surrenders in Poland, earnings from CEE were flat.
- Asia recorded a loss of EUR 3 million, which was driven by unfavorable mortality experience of EUR 4 million and an impact of EUR 2 million from lower than anticipated reinvestment yields.
- Earnings from Spain & Portugal declined to EUR 3 million as a result of the divestment of Aegon’s stake in La Mondiale and the joint venture with Caja Badajoz. Excluding these divestments, earnings were up as the joint venture with Banco Santander Totta in Portugal was included for the first time.
- Results from Variable Annuities Europe were stable at EUR 1 million.
- Earnings from Aegon Asset Management increased 43% to EUR 45 million. This resulted from higher performance and management fees driven by higher third-party asset balances and favorable currency movements. A performance fee of EUR 9 million was received in relation to a single convertible bond mandate in China, which was payable upon conversion of the bonds.

Net income

Aegon’s operations in New Markets recorded a net result of EUR 28 million. The loss from fair value items amounted to EUR 4 million as a result of differences between the transactional and functional currencies at Variable Annuities Europe. This was partly offset by gains on hedging of variable annuities in Japan. Impairments of EUR 2 million related to the Hungarian mortgage portfolio. Realized gains amounted to EUR 5 million.

Return on capital

The return on average capital, excluding revaluation reserves, invested in Aegon’s businesses in New Markets decreased to 5.3% due to lower net underlying earnings. The return on capital of Aegon’s businesses excludes the benefit of leverage at the holding.

Operating expenses

Operating expenses increased 23% to EUR 192 million in the first quarter due to unfavorable currency movements and growth of the business. At constant currencies, the increase was 15%.

 

   17


LOGO

 

Sales

New life sales increased 68% to EUR 105 million compared with the first quarter of 2014.

- In Central & Eastern Europe, new life sales increased 17% to EUR 28 million driven by sales growth through the tied agent network in Hungary and all distribution channels in Turkey.
- In Asia, new life sales more than doubled to EUR 65 million. This was mainly the result of higher sales of universal life products in anticipation of price changes implemented at the end of the first quarter. In addition, sales in China increased strongly as a result of the successful introduction of a new whole life critical illness product.
- In Spain & Portugal, new life sales decreased slightly to EUR 12 million. The first time contribution of the joint venture with Banco Santander Totta in Portugal was more than offset by lower sales from bancassurance joint ventures in Spain, partly as a result of the divestment of the partnership with Caja Badajoz.

New premium production from Aegon’s accident & health and general insurance businesses increased to EUR 26 million. This was driven by growth in the car and travel insurance segments in Central & Eastern Europe, as well as strong fee-based health sales in Asia.

Gross deposits in New Markets were up 24% to EUR 5.5 billion. Deposits in Aegon Asset Management increased by EUR 1 billion to EUR 5.1 billion mainly as a result of higher absolute return fund sales in the United Kingdom and the continued success of the Dutch mortgage fund. Deposits in Asia increased to EUR 202 million in anticipation of lower sales commissions on variable annuities in Japan. Deposits in Variable Annuities Europe increased to EUR 90 million.

Net deposits in New Markets amounted to EUR 2.3 billion in the first quarter. Net deposits were mainly driven by strong net inflows for Asset Management in the United Kingdom (EUR 0.9 billion), the Netherlands (EUR 0.6 billion) and China (EUR 0.9 billion).

Market consistent value of new business

The market consistent value of new business in New Markets decreased to EUR 29 million. Higher sales were more than offset by lower margins in Asia due to low interest rates. Aegon actively manages the profitability of new business through adjusting the pricing and design of its life insurance and variable annuity products. In response to the further decline of interest rates, Aegon adjusted the crediting rate on its universal life products in the first quarter and subsequently lowered sales commissions on variable annuities in Asia. Future production for these products is expected to decline towards last year’s level following the adjustments.

Revenue-generating investments

Revenue-generating investments increased 17% to EUR 98 billion during the first quarter of 2015, driven by net inflows, favorable currency movements and positive market impacts.

 

   18


LOGO

 

New Markets

 

                                                     
EUR millions    Notes      Q1 2015      Q4 2014           Q1 2014      %  
   

Underlying earnings before tax

                   

Central & Eastern Europe

                        (16)         19          (71)   

Asia

        (3)         (4)         39                    

Spain & Portugal

                        53          10          (74)   

Variable Annuities Europe

                        (74)                 (14)   

Aegon Asset Management

              45          26          73          32          42    

Underlying earnings before tax

        51           33           54           61           (16)    
   

Fair value items

        (4)         (14)         68                    

Realized gains / (losses) on investments

                        40                    

Net impairments

        (2)         (4)         55          (9)         80    

Other income / (charges)

                      (37)                 (2)           

Income before tax

        50           (18)                 59           (14)   

Income tax

              (22)         (6)                 (16)         (38)   

Net income

              28           (23)                 43           (34)   
   

Net income / (loss) attributable to:

                   

Equity holders of Aegon N.V.

        28          (24)                 43          (34)   
   

Net underlying earnings

              29           21           42           45           (35)   
   

Commissions and expenses

        295          285                  233          27    

of which operating expenses

              192          198          (3)         156          23    
   

New life sales

     10                    

Life single premiums

        596          322          85          205          190    

Life recurring premiums annualized

              45          44                  42            

Total recurring plus 1/10 single

        105           76           37           62           68     
   

Life

        101          75          34          60          67    

Associates

                              142                  85    

Total recurring plus 1/10 single

        105           76           37           62           68     
   

Central & Eastern Europe

        28          34          (17)         24          17    

Asia

        65          30          120          26          155    

Spain & Portugal

              12          13          (12)         13          (10)   

Total recurring plus 1/10 single

        105           76           37           62           68     
   

New premium production accident and health insurance

        11                  31                  23    

New premium production general insurance

              15          15                  10          56    
   

Gross deposits (on and off balance)

     10                    

Central & Eastern Europe

        54          55          (1)         58          (6)   

Asia

        202          153          32          138          46    

Spain & Portugal

                45          (88)                   

Variable Annuities Europe

        90          87                  85            

Aegon Asset Management

              5,147          4,525          14          4,147          24    

Total gross deposits

              5,499           4,864           13           4,428           24     
   

Net deposits (on and off balance)

     10                    

Central & Eastern Europe

        24                          (1,494)           

Asia

        190          137          39          132          45    

Spain & Portugal

                35          (94)         (1)           

Variable Annuities Europe

        (21)         (15)         (44)         (17)         (27)   

Aegon Asset Management

              2,081          431                  (1,546)           

Total net deposits / (outflows)

              2,276           591                   (2,927)         -     
                 

Revenue-generating investments

 

  

              Mar. 31,
2015
     Dec. 31,
2014
     %      Mar. 31,
2014
     %  

Revenue-generating investments (total)

              98,497           84,251           17           67,953           45    

Investments general account

        5,602          4,806          17          3,603          55   

Investments for account of policyholders

        7,400          6,971                  6,450          15   

Off balance sheet investments third parties

              85,495          72,474          18          57,899          48   

 

   19


LOGO

 

Market consistent value of new business                            
             MCVNB  
EUR millions, after tax           Q1 2015     Q4 2014      %     Q1 2014     %  
   

Americas

       62         133          (53)        152         (59)   

The Netherlands

       40         40          -          39         4     

United Kingdom

              (6)         -                 -     

New Markets

             29         29          (1)        32         (9)   

Total

             140          196           (29)          223          (37)    

    

             
Modeled new business: APE                                                  
         Premium business   
               APE   
EUR millions   Notes      Q1 2015     Q4 2014      %     Q1 2014      
      7                 

Americas

       426         360          18         358         19    

The Netherlands

       101         163          (38)        81         25    

United Kingdom

       268         194          38         250           

New Markets

             126         98          29         118           

Total

             922          815           13         806          14    
             
Modeled new business: Deposits   
         Deposit business   
               Deposits   
EUR millions   Notes      Q1 2015     Q4 2014          Q1 2014      
      7                 

Americas

       6,078         6,005                 5,021         21    

New Markets

             299         249          20         225         33    

Total

             6,377          6,254                  5,246          22    

    

             
MCVNB/PVNBP summary                                            
            Premium business        
             MCVNB     PVNBP      MCVNB /
PVNBP
    MCVNB /
APE
       
EUR millions   Notes      Q1 2015         %     %        
      8                 

Americas

       49        2,200         2.2        11.4     

The Netherlands

       44        1,711         2.6        43.6     

United Kingdom

       8        1,858         0.5        3.1     

New Markets

             32        961         3.3        25.1     

Total

             133         6,731          2.0        14.4     
             
             Deposit business        
             MCVNB     PVNBP      MCVNB /
PVNBP
    MCVNB /
Deposits
       
EUR millions   Notes      Q1 2015         %     %        
      8                 

Americas

       14        7,919         0.2        0.2     

The Netherlands

       (4     853         (0.4     -       

New Markets

             (3     343         (0.8     (0.9  

Total

                    9,115          0.1        0.1     

Currencies

Income statement items: average rate 1 EUR = USD 1.1272 (2014: USD 1.3695).

Income statement items: average rate 1 EUR = GBP 0.7434 (2014: GBP 0.8276).

Balance sheet items: closing rate 1 EUR = USD 1.0740 (2014: USD 1.3783; year-end 2014: USD 1.2101).

Balance sheet items: closing rate 1 EUR = GBP 0.7235 (2014: GBP 0.8267; year-end 2014: GBP 0.7760).

 

  

20


LOGO

 

ADDITIONAL INFORMATION

The Hague – May 13, 2015

Presentation

The conference call presentation is available on aegon.com as of 7.30 a.m. CET.

Supplements

Aegon’s Q1 2015 Financial Supplement and Condensed Consolidated Interim Financial Statements are available on aegon.com.

Conference call including Q&A

9:00 a.m. CET

Audio webcast on aegon.com

Dial-in numbers

United States: +1 646 254 3362

United Kingdom: +44 203 427 1919

The Netherlands: +31 20 716 8256

Two hours after the conference call, a replay will be available on aegon.com.

 

 

 

 

Aegon’s roots go back 170 years – to the first half of the nineteenth century. Since then, Aegon has grown into an international company, with businesses in more than 20 countries in the Americas, Europe and Asia. Today, Aegon is one of the world’s leading financial services organizations, providing life insurance, pensions and asset management. Aegon’s purpose is to help people take responsibility for their financial future. More information: aegon.com.

 

  


LOGO

 

Notes:

 

1) 

For segment reporting purposes underlying earnings before tax, net underlying earnings, commissions and expenses, operating expenses, income tax (including joint ventures (jv’s) and associated companies), income before tax (including jv’s and associated companies) and market consistent value of new business are calculated by consolidating on a proportionate basis the revenues and expenses of Aegon’s joint ventures and Aegon’s associates. Aegon believes that these non-IFRS measures provide meaningful information about the underlying results of Aegon’s business, including insight into the financial measures that Aegon’s senior management uses in managing the business. Among other things, Aegon’s senior management is compensated based in part on Aegon’s results against targets using the non-IFRS measures presented here. While other insurers in Aegon’s peer group present substantially similar non-IFRS measures, the non-IFRS measures presented in this document may nevertheless differ from the non-IFRS measures presented by other insurers. There is no standardized meaning to these measures under IFRS or any other recognized set of accounting standards. Readers are cautioned to consider carefully the different ways in which Aegon and its peers present similar information before comparing them.

  

Aegon believes the non-IFRS measures shown herein, when read together with Aegon’s reported IFRS financial statements, provide meaningful supplemental information for the investing public to evaluate Aegon’s business after eliminating the impact of current IFRS accounting policies for financial instruments and insurance contracts, which embed a number of accounting policy alternatives that companies may select in presenting their results (i.e. companies can use different local GAAPs to measure the insurance contract liability) and that can make the comparability from period to period difficult.

  

For a definition of underlying earnings and the reconciliation from underlying earnings before tax to income before tax, being the most comparable IFRS measure, reference is made to Note 3 “Segment information” of Aegon’s condensed consolidated interim financial statements.

2) 

Sales is defined as new recurring premiums plus 1/10 of single premiums plus 1/10 of gross deposits plus new premium production accident and health plus new premium production general insurance.

 

3) 

The present value, at point of sale, of all cashflows for new business written during the reporting period, calculated using approximate point of sale economics assumptions. Market consistent value of new business is calculated using a risk neutral approach, ignoring the investment returns expected to be earned in the future in excess of risk free rates (swap curves), with the exception of an allowance for liquidity premium. The market consistent value of new business is calculated on a post tax basis, after allowing for the time value financial options and guarantees, a market value margin for non-hedgeable financial and non-financial risks and the costs of non-hedgeable stranded capital.

 

4) 

Return on equity is a ratio using a non-GAAP measure and is calculated by dividing the net underlying earnings after cost of leverage by the average shareholders’ equity excluding the preferred shares, the revaluation reserve and the reserves related to defined benefit plans.

5) 

Included in other income/(charges) are charges made to policyholders with respect to income tax in the United Kingdom.

6) 

Includes production on investment contracts without a discretionary participation feature of which the proceeds are not recognized as revenues but are directly added to Aegon’s investment contract liabilities.

7) 

APE = recurring premium + 1/10 single premium.

8) 

PVNBP: Present value of new business premiums (PVNBP) is the premiums for the new business sold during the reporting period, projected using assumptions and projection periods that are consistent with those used to calculate the market consistent value of new business, discounted back to point of sale using the swap curve (plus liquidity premium where applicable).

9) 

Reconciliation of operating expenses, used for segment reporting, to Aegon’s IFRS based operating expenses.

 

      Q1 2015       
   

Employee expenses

     562      

Administrative expenses

     297      

Operating expenses for IFRS reporting

     859      

Operating expenses related to jv’s and associates

     43      

Operating expenses in earnings release

     902      

 

10) 

New life sales, gross deposits and net deposits data include results from Aegon’s joint ventures and Aegon’s associates consolidated on a proportionate basis.

 

11) 

Operational free cash flows reflect the sum of the return on free surplus, earnings on in-force business, release of required surplus on in-force business reduced by new business first year strain and required surplus on new business. Operational free cash flows is defined as the capital generated in a local operating unit measured as the change in the local binding capital metric for that period and after investments in new business. Operational free cash flow is a non-IFRS financial measure that should not be confused with cash flow from operations or any other cash flow measure calculated in accordance with IFRS. Management believes that operational free cash flows provides meaningful information to investors regarding capital generated on a net basis by Aegon’s operating subsidiaries that may be available at the holding company. Because elements of operational free cash flows are calculated in accordance with local solvency requirements rather than in accordance with any recognized body of accounting principles, there is no IFRS financial measure that is directly comparable to operational free cash flows.

 

a) 

The calculation of the IGD (Insurance Group Directive) capital surplus and ratio are based on Solvency I capital requirements on IFRS for entities within the EU (Pillar 1 for Aegon UK), and local regulatory solvency measurements for non-EU entities.

  

Specifically, required capital for the life insurance companies in the US is calculated as two times the upper end of the Company Action Level range (200%) as applied by the National Association of Insurance Commissioners in the US. The calculation of the IGD ratio excludes the available and required capital of the UK With-Profit funds. In the UK solvency surplus calculation the local regulator only allows the available capital number of the With-Profit funds included in overall local available capital to be equal to the amount of With-Profit funds’ required capital.

b) 

The results in this release are unaudited.

 

  


LOGO

 

DISCLAIMERS

Cautionary note regarding non-IFRS measures

This document includes the following non-IFRS financial measures: underlying earnings before tax, income tax, income before tax and market consistent value of new business. These non-IFRS measures are calculated by consolidating on a proportionate basis Aegon’s joint ventures and associated companies. The reconciliation of these measures, except for market consistent value of new business, to the most comparable IFRS measure is provided in note 3 ‘Segment information’ of Aegon’s Condensed Consolidated Interim Financial Statements. Market consistent value of new business is not based on IFRS, which are used to report Aegon’s primary financial statements and should not be viewed as a substitute for IFRS financial measures. Aegon may define and calculate market consistent value of new business differently than other companies. Aegon believes that these non-IFRS measures, together with the IFRS information, provide meaningful information about the underlying operating results of Aegon’s business including insight into the financial measures that senior management uses in managing the business. In addition, return on equity is a ratio using a non-GAAP measure and is calculated by dividing the net underlying earnings after cost of leverage by the average shareholders’ equity excluding the preferred shares, the revaluation reserve and the reserves related to defined benefit plans.

Local currencies and constant currency exchange rates

This document contains certain information about Aegon’s results, financial condition and revenue generating investments presented in USD for the Americas and GBP for the United Kingdom, because those businesses operate and are managed primarily in those currencies. Certain comparative information presented on a constant currency basis eliminates the effects of changes in currency exchange rates. None of this information is a substitute for or superior to financial information about Aegon presented in EUR, which is the currency of Aegon’s primary financial statements.

Forward-looking statements

The statements contained in this document that are not historical facts are forward-looking statements as defined in the US Private Securities Litigation Reform Act of 1995. The following are words that identify such forward-looking statements: aim, believe, estimate, target, intend, may, expect, anticipate, predict, project, counting on, plan, continue, want, forecast, goal, should, would, is confident, will, and similar expressions as they relate to Aegon. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Aegon undertakes no obligation to publicly update or revise any forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which merely reflect company expectations at the time of writing. Actual results may differ materially from expectations conveyed in forward-looking statements due to changes caused by various risks and uncertainties. Such risks and uncertainties include but are not limited to the following:

¡    

Changes in general economic conditions, particularly in the United States, the Netherlands and the United Kingdom;

¡    

Changes in the performance of financial markets, including emerging markets, such as with regard to:

   

The frequency and severity of defaults by issuers in Aegon’s fixed income investment portfolios;

   

The effects of corporate bankruptcies and/or accounting restatements on the financial markets and the resulting decline in the value of equity and debt securities Aegon holds; and

   

The effects of declining creditworthiness of certain private sector securities and the resulting decline in the value of sovereign exposure that Aegon holds;

¡    

Changes in the performance of Aegon’s investment portfolio and decline in ratings of Aegon’s counterparties;

¡    

Consequences of a potential (partial) break-up of the euro;

¡    

The frequency and severity of insured loss events;

¡    

Changes affecting longevity, mortality, morbidity, persistence and other factors that may impact the profitability of Aegon’s insurance products;

¡    

Reinsurers to whom Aegon has ceded significant underwriting risks may fail to meet their obligations;

¡    

Changes affecting interest rate levels and continuing low or rapidly changing interest rate levels;

¡    

Changes affecting currency exchange rates, in particular the EUR/USD and EUR/GBP exchange rates;

¡    

Changes in the availability of, and costs associated with, liquidity sources such as bank and capital markets funding, as well as conditions in the credit markets in general such as changes in borrower and counterparty creditworthiness;

¡    

Increasing levels of competition in the United States, the Netherlands, the United Kingdom and emerging markets;

¡    

Changes in laws and regulations, particularly those affecting Aegon’s operations, ability to hire and retain key personnel, the products Aegon sells, and the attractiveness of certain products to its consumers;

¡    

Regulatory changes relating to the insurance industry in the jurisdictions in which Aegon operates;

¡    

Changes in customer behavior and public opinion in general related to, among other things, the type of products also Aegon sells, including legal, regulatory or commercial necessity to meet changing customer expectations;

¡    

Acts of God, acts of terrorism, acts of war and pandemics;

¡    

Changes in the policies of central banks and/or governments;

¡    

Lowering of one or more of Aegon’s debt ratings issued by recognized rating organizations and the adverse impact such action may have on Aegon’s ability to raise capital and on its liquidity and financial condition;

¡    

Lowering of one or more of insurer financial strength ratings of Aegon’s insurance subsidiaries and the adverse impact such action may have on the premium writings, policy retention, profitability and liquidity of its insurance subsidiaries;

¡    

The effect of the European Union’s Solvency II requirements and other regulations in other jurisdictions affecting the capital Aegon is required to maintain;

¡    

Litigation or regulatory action that could require Aegon to pay significant damages or change the way Aegon does business;

¡    

As Aegon’s operations support complex transactions and are highly dependent on the proper functioning of information technology, a computer system failure or security breach may disrupt Aegon’s business, damage its reputation and adversely affect its results of operations, financial condition and cash flows;

¡    

Customer responsiveness to both new products and distribution channels;

¡    

Competitive, legal, regulatory, or tax changes that affect profitability, the distribution cost of or demand for Aegon’s products;

¡    

Changes in accounting regulations and policies or a change by Aegon in applying such regulations and policies, voluntarily or otherwise, may affect Aegon’s reported results and shareholders’ equity;

¡    

The impact of acquisitions and divestitures, restructurings, product withdrawals and other unusual items, including Aegon’s ability to integrate acquisitions and to obtain the anticipated results and synergies from acquisitions;

¡    

Catastrophic events, either manmade or by nature, could result in material losses and significantly interrupt Aegon’s business; and

¡    

Aegon’s failure to achieve anticipated levels of earnings or operational efficiencies as well as other cost saving and excess capital and leverage ratio management initiatives.

Further details of potential risks and uncertainties affecting Aegon are described in its filings with the Netherlands Authority for the Financial Markets and the US Securities and Exchange Commission, including the Annual Report. These forward-looking statements speak only as of the date of this document. Except as required by any applicable law or regulation, Aegon expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Aegon’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.