Net income increases to EUR 910 million, reflecting better
result on fair value items and lower Other charges
- Underlying earnings before tax decrease by 5% to EUR 963
million due to impacts from lower interest rates in the Americas,
and a change in the recognition of interest expenses related to
debt refinancing. Earnings growth in other regions is from
favorable claims experience and business growth
- Fair value gains of EUR 168 million, driven by positive real
estate revaluations in the Netherlands and the US
- Realized gains on investments of EUR 131 million, mostly in the
US
- Other charges of EUR 188 million relate mainly to model and
assumption changes, restructuring charges, and IFRS 9 / 17 project
costs
- Net income of EUR 910 million leads to improvement of the gross
financial leverage ratio to 28.5%
- Return on equity of 9.5% in the second half of 2019
Elevated net outflows due to US Retirement Plans; insurance
sales growth in key focus areas
- Gross deposits increased by 38% to EUR 80 billion, mainly
driven by Aegon Asset Management
- Net outflows of EUR 22.5 billion, as a result of contract
discontinuances in US Retirement Plans and outflows in the US
annuity businesses, partly offset by continued external third-party
net inflows in Asset Management
- New life sales increase by 15% to EUR 456 million following
business growth in Asia, and higher pension sales in the
Netherlands
- Accident & Health insurance sales are up by 19% to EUR 113
million, mainly driven by a large disability contract win in the
Americas
- Property & casualty new premium production up by 6% to EUR
64 million, driven by business growth in Spain
Increased dividend based on strong capital position and
normalized capital generation
- Proposed final 2019 dividend per share of EUR 0.16; full-year
dividend increases by 7% compared to 2018
- Solvency II ratio above the target zone at 201%. The 4%-points
increase in the second half of 2019 is mainly from management
actions, including longevity reinsurance in the Netherlands, which
are partly offset by adverse impacts of assumption changes. The
Solvency II ratio of Aegon the Netherlands increased to 171%
- Capital generation of EUR 1,183 million, including favorable
one-time items of EUR 304 million and positive market impacts of
EUR 24 million. Normalized capital generation after holding
expenses of EUR 855 million
- Holding excess cash at EUR 1.2 billion
Statement of Alex Wynaendts, CEO
"In the second half of 2019 we continued to operate in a
challenging environment. Our underlying earnings were impacted by
low interest rates while we experienced net outflows in our US
retirement and annuity businesses. As a result we achieved a return
on equity of 9.5%, below our target of 10%. However, we increased
our capital generation which, combined with a number of management
actions, enabled us to maintain a strong capital position. This
allows us to announce a final dividend of 16 eurocents, increasing
our full-year dividend by 7%.
We continue to execute on our strategy, simplifying Aegon’s
structure and becoming more proactive in managing our businesses.
We have accelerated the release of capital from our mature
businesses in the Netherlands by insuring the longevity risk
associated with 12 billion euro of liabilities under Solvency II.
Also, we completed the sale of our stake in our Japanese joint
ventures with Sony Life in early 2020. In our growth businesses, we
completed the Cofunds integration, thereby achieving the targeted
expense savings and confirming our position as largest player in
the UK platform market. Commercial momentum has improved with an
increase in Life and Accident & Health sales, and higher gross
deposits.
As a major investor, we also take our responsibility towards
society, and we combine our promise of a secure and healthy
financial future for our customers with caring about the
environment. Our updated Responsible Investment Policy expands the
criteria for excluding companies with coal-related activities from
our investments.”
Note: All comparisons in this release are against 2H 2018,
unless stated otherwise
Financial overview EUR millions 13 Notes Second half
2019 Second half 2018 % First half 2019 % Full Year 2019 Full Year
2018 %
Underlying earnings before tax
1
Americas
547
614
(11)
576
(5)
1,124
1,216
(8)
Europe
437
404
8
439
(1)
875
839
4
Asia
30
23
27
32
(8)
62
55
13
Asset Management
79
69
14
60
30
139
151
(8)
Holding and other
(129)
(100)
(29)
(98)
(32)
(227)
(188)
(21)
Underlying earnings before tax
963
1,010
(5)
1,010
(5)
1,973
2,074
(5)
Fair value items
168
(257)
n.m.
(394)
n.m.
(226)
(260)
13
Realized gains / (losses) on investments
131
(10)
n.m.
275
(52)
405
(77)
n.m. Net impairments
17
(19)
n.m.
(39)
n.m.
(22)
(19)
(15)
Other income / (charges)
(188)
(581)
68
(93)
(102)
(281)
(875)
68
Run-off businesses
15
(7)
n.m.
8
82
23
(14)
n.m.
Income before tax
1,105
136
n.m.
767
44
1,872
829
126
Income tax
(195)
117
n.m.
(149)
(32)
(344)
(84)
n.m.
Net income / (loss)
910
253
n.m.
618
47
1,528
744
105
Net income / (loss) attributable to: Owners of Aegon
N.V.
910
253
n.m.
618
47
1,528
744
105
Non-controlling interests
(0)
1
n.m.
0
n.m.
0
1
(44)
Net underlying earnings
818
891
(8)
833
(2)
1,651
1,754
(6)
Return on equity
4
9.5%
10.2%
(7)
9.6%
(1)
9.6%
10.2%
(6)
Commissions and expenses
3,420
3,404
-
3,180
8
6,601
6,673
(1)
of which operating expenses
9
2,011
1,923
5
1,918
5
3,929
3,786
4
Gross deposits (on and off balance)*
10
Americas
18,787
18,387
2
21,619
(13)
40,406
38,279
6
Europe
13,409
11,985
12
9,898
35
23,307
23,798
(2)
Asia
0
51
(100)
7
(98)
7
128
(94)
Asset Management
47,459
27,328
74
33,481
42
80,939
59,495
36
Total gross deposits
79,655
57,751
38
65,005
23
144,660
121,700
19
Net deposits (on and off balance)*
10
Americas
(25,900)
(7,594)
n.m.
(3,471)
n.m.
(29,371)
(14,734)
(99)
Europe
(62)
(100)
38
(1,961)
97
(2,023)
2,779
n.m. Asia
(5)
2
n.m.
7
n.m.
1
7
(83)
Asset Management
3,600
(729)
n.m.
3,241
11
6,841
7,526
(9)
Total net deposits excluding run-off businesses
(22,367)
(8,421)
(166)
(2,184)
n.m.
(24,551)
(4,421)
n.m. Run-off businesses
(112)
(126)
11
(467)
76
(578)
(234)
(147)
Total net deposits / (outflows)
(22,479)
(8,547)
(163)
(2,651)
n.m.
(25,130)
(4,656)
n.m. New life sales
2, 10
Life single premiums
975
687
42
705
38
1,679
1,380
22
Life recurring premiums annualized
358
329
9
334
7
693
682
2
Total recurring plus 1/10 single
456
398
15
405
13
861
820
5
New life sales
2,10
Americas
219
208
5
200
9
419
420
-
Europe
173
138
25
137
26
311
278
12
Asia
64
52
23
67
(6)
131
122
7
Total recurring plus 1/10 single
456
398
15
405
13
861
820
5
New premium production accident and health insurance
113
95
19
117
(4)
230
308
(25)
New premium production property & casualty insurance
64
60
6
65
(1)
129
121
6
Market consistent value of new business
3
195
236
(17)
270
(28)
465
540
(14)
*Due to the announced divestment of Aegon’s 50% stake in the joint
ventures with Sony Life, Net & Gross Deposits of Japan are no
longer included in 2H 2019.
Revenue-generating
investments & Employee numbers Dec. 31, June 30,
Dec. 31,
2019
2019
%
2018
%
Revenue-generating investments (total)*
897,671
871,648
3
804,341
12
Investments general account
146,750
144,311
2
139,024
6
Investments for account of policyholders
226,374
213,137
6
194,353
16
Off balance sheet investments third parties
524,547
514,200
2
470,963
11
Employees
23,757
25,943
(8)
26,543
(10)
of which agents
4,852
6,878
(29)
6,793
(29)
of which Aegon's share of employees in joint ventures and
associates
5,162
7,070
(27)
6,854
(25)
*Due to the announced divestment of Aegon’s 50% stake in the joint
ventures with Sony Life, Revenue Generating Investments of Japan
are no longer included in 2H2019. Off-balance investments for Japan
amount to EUR 2.3 billion per December 31, 2019.
Strategic highlights
- Drive for Growth: United Kingdom delivers on run-rate
savings from Cofunds integration, and Aegon Asset Management
organizationally realigns to focus on growth
- Scale-up for Future: Insurance joint venture in China with
high sales leveraging e-commerce partnership
- Manage for Value: Successful longevity reinsurance deal
contributes to restoring dividend paying capacity of Aegon the
Netherlands
Aegon’s strategy
Aegon’s purpose – to help people achieve a lifetime of financial
security – forms the basis of the company’s strategy. The central
focus of the strategy is to further transform Aegon to a customer
needs-driven company. This means serving diverse and evolving needs
across the customer life cycle by being a trusted partner for
financial solutions that are relevant, simple, rewarding, and
convenient. Aegon aims to develop long-term customer relationships
by providing guidance and advice, and identifying additional
financial security needs at every stage of customers’ lives.
In the second half of 2019, we continued focusing on execution
of our strategy. The company continues to simplify its business
while focusing on sustainable growth in sales and capital
generation. By developing long-term relationships with Aegon’s
large customer base, and further improving customer engagement, the
company strives for profitable organic growth. Active and
structured portfolio management enables Aegon to create value for
all its stakeholders including shareholders, business partners and
customers. Sustainably growing capital generation is the basis of
being able to provide shareholders with attractive returns, now and
in the future.
Aegon groups its businesses into three distinct categories –
Drive for Growth, Scale-up for Future, and Manage for Value:
- The vast majority of Aegon’s investments are directed to
multi-product, digitally‑enabled and relationship-based Drive for
Growth businesses which are at the core of the strategy and will
drive future capital generation.
- Scale-up for Future businesses are aimed at capturing
meaningful new opportunities in a systematic way.
- Manage for Value category consists of at-scale businesses,
which are mostly spread-based, single-product relationships which
are managed for value while keeping customers' interests at
heart.
All units within the Asian and Southern and Eastern European
regions are positioned in the Drive for Growth and Scale-up for
Future categories. A natural next step was to change the way the
group is organized. To manage these businesses more efficiently,
Aegon has announced the creation of Aegon International as of
January 1, 2020. This brings Aegon’s operations in Asia and
Southern and Eastern Europe under a single leadership structure.
The objective of this new division is to accelerate growth and
value creation by further leveraging cross-border synergies through
the development of new business models and realizing operational
efficiencies.
On December 12, 2019 Aegon hosted an Analyst & Investor
webinar that highlighted how the company is particularly
well-positioned to capture growth opportunities in Brazil, Spain
and Asia, as well as through its online banking business in the
Netherlands. The businesses featured in the webinar, which are
predominantly in the Scale-up for Future category, are focused on
innovative and easy-to-use solutions and services that customers
need in a fast-changing world. A replay of the webinar is available
on Aegon.com.
Aegon remains committed to doing business in a responsible way
by contributing to smart financial planning, promoting healthy
lifestyles, and providing relevant solutions at every stage of the
lives of its customers. Furthermore, the company takes a thoughtful
approach to secure retirement and healthy aging in society, and
aims to make a lasting contribution to a healthy environment
through investments and active ownership. Aegon invests, where it
can, to bring social benefits to the fore and contribute to a
healthier environment. To support this approach, Aegon has put in
place a new Group Responsible Investment policy. The new policy is
effective from January 1, 2020 and as a result new investments in
large mining and utility companies that are expanding their
coal-related operations have been ceased within Aegon.
In order to execute our strategy successfully, employees are
Aegon’s prime assets. A continuous feedback loop is in place,
exemplified by the ninth consecutive global employee survey. The
2019 survey was completed by over 86% of all Aegon employees
worldwide, and showed improvement in overall engagement, which
increased by 2 points to 67 out of a maximum 100 points. The
improvement in engagement over the last year demonstrates Aegon’s
ongoing work to become the most preferred employer in the sector,
which is enabling Aegon to attract and develop the talent required
to best serve the needs of its customers.
Americas
Transamerica is experiencing a challenging economic and
commercial environment, as underscored by net outflows across the
business, especially in Retirement Plans. Low interest rates put
pressure on business margins and drive an industry shift to more
fee based businesses, further increasing competition in an already
crowded market. Responsiveness to customers and distribution
partners is key, and Transamerica is actively addressing previous
service issues to improve retention and accelerate growth. In the
second half of 2019, Transamerica’s continued focus on
customer-centricity has led to improvements in early indicators for
future growth, encouraging commercial momentum in certain focus
areas and operational improvements.
Workplace Solutions
Transamerica has invested in service and digital capabilities
focused on improving the customer experience and increasing
retention in Workplace Solutions. These investments are leading to
higher customer satisfaction and are expected to stem plan sponsor
withdrawals. Touchpoint NPS (tNPS) is a vital indicator of a
customer’s thoughts about the level of service that they are
receiving. Retirement service scores have seen a significant
improvement and are now in the 50s, amongst the leaders based on
benchmarking data of the investment industry. This is a key factor
in driving written sales of Retirement Plans to an increase of 33%
over prior year results.
Retention is critical in competitive businesses, and investments
in customer service and operations are beginning to show up in
leading indicators. The number of current plan sponsors that are
initiating requests for proposal (RFPs) has fallen by 50% since
2018, pointing to a better outlook for contract discontinuances.
RFP activity can be an early indicator of future retention because
of the six to eighteen months it can take to change providers. At
the same time, participant withdrawals are expected to remain at
the higher levels we have seen in the past years, reflecting the
increasing percentage of the American population in retirement.
Transamerica’s Advice Center is helping customers make financial
decisions around their retirement, which allows the company to
strengthen customer relationships and retain the assets within
Transamerica. Over the last year, deposits to Individual Retirement
Accounts (IRAs) through the Advice Center increased almost 40% to
USD 1.4 billion, and the Advice Center recently reached USD 5
billion in IRA assets. Consolidation of assets from other sources
into Transamerica retirement plans continues to grow supported by
call center referrals and retirement planning counselor
engagements, and in 2019, these deposits grew by over 50% to USD
2.4 billion. In addition, Transamerica offers the Managed Advice
service to 100% of the plans in the large market along with a
growing number of mid-market plans adopting it as well. Managed
Advice has had a continuous increase in participants and assets
under management since the end of 2018.
The SECURE Act was passed in December 2019, representing the
most significant legislation on retirement security in over a
decade. It will have significant relevance to Transamerica’s
Retirement Plans business. The SECURE Act was championed by
Transamerica, which provided significant thought leadership and
advocacy in enacting the legislation. Several of the provisions
have been long-time priorities for Transamerica, including a
provision which allows unaffiliated businesses to form multiple
employer plans (i.e. open multiple employer plans). The SECURE Act
makes it easier for plan sponsors to fulfill their fiduciary
responsibilities by choosing insurance companies to provide
annuities as either in-plan investment or a distribution
option.
Individual Solutions
In Individual Solutions, continued progress towards operational
excellence is underway. TCS’s performance against service level
agreements continues to improve while focus remains on enhancements
to support customer and advisor experience and growth. The launch
of the first new product on TCS’s administrative platform (BaNCS)
is now planned in the first half of 2020.
Nearly 200 Transamerica employees were transferred to LTCG as
part of the partnership announced in March 2019, which established
LTCG as a partner in the administration of long-term care.
Experience from the TCS transition was applied, which helped the
transition to go smoothly. As with the TCS arrangement, these
transferred employees will continue to support Transamerica
customers, ensuring service continuity. LTCG’s advanced data
analytics, actuarial and risk management capabilities are aligned
with providing an excellent experience for customers.
Fixed Indexed Annuity product availability has been extended
into California, a major market for Transamerica, with an
expectation that this will drive sales opportunity in 2020. Gross
deposits in the second half of 2019 for fixed indexed annuity sales
grew by 59% to USD 206 million, which was helped by a new
distribution relationship which is expected to continue to add to
sales momentum going forward.
Enhancements to Transamerica’s variable annuity product suite
earlier in 2019 are yielding tangible results. Transamerica’s US
variable annuity market share improved to 4.6% per end of December,
based on LIMRA’s estimate of industry sales. This is a sizeable
increase from the 3.2% market share in December 2018. In 2019,
Transamerica made the strategic decision to protect its Variable
Annuity distribution franchise, and accepted negative market
consistent value of new business in the short term. Pricing actions
were implemented in December, and Transamerica will take steps to
further improve profitability while maintaining a competitive
franchise.
Europe
In Europe, Aegon’s focus is on growing its modern
digitally-enabled businesses organically, and reinforcing its
commitments to reallocate capital to future-proof businesses.
In the Netherlands, Aegon announced a longevity reinsurance
deal, reinsuring about a quarter of its longevity exposure. This
has reduced required capital and improved Aegon’s capital position.
The reinsurance agreement with Canada Life Reinsurance, provides
full protection against the longevity risk associated with EUR 12
billion of best-estimate liabilities under Solvency II. The
longevity reinsurance agreement has no impact on the services and
guarantees that Aegon provides to its policyholders, and is in line
with Aegon’s strategy to release capital from mature, spread-based
businesses. This supported Aegon the Netherlands’ move back in its
Solvency II target zone. Aegon the Netherlands has remitted EUR 100
million to the Holding in February 2020.
As of January 1, 2020, employees of Aegon the Netherlands began
accruing pension benefits in a defined contribution plan instead of
the current defined benefit plan, in line with market trends. All
entitlements accrued before that date will remain unchanged and are
guaranteed. This was agreed with the trade unions and their
respective members, and received a positive advice from the Works
Council. The change of pension scheme protects Aegon’s capital
position and reduces volatility in its pension expenses.
To improve insights into customers and better enable them to
make decisions regarding their financial futures, the Netherlands
organization has transitioned to an agile way of working. As a
consequence, the organization is expected to become more effective
and efficient in service delivery. In the second half of 2019, a
new organizational structure was adopted which is fully centered
around value streams, ensuring nimbleness and customer focus. As a
result of the transition, changes to the senior management team
were announced in January 2020.
Challenging competitive conditions in the Dutch individual life
business have led to management deciding to stop underwriting new
individual life policies effective March 2020. This includes term
life and individual annuities for which new life sales totaled EUR
12 million in 2019. Aegon will continue to provide pension and
non-life insurance products in the Netherlands.
In the United Kingdom, Aegon appointed Mike Holliday-Williams as
the new CEO. This appointment signals Aegon's continuing commitment
to build on the strong foundation of the United Kingdom business.
In the past years, the business has been successfully modernized,
transformed and repositioned. From this solid base, the aim is to
grow the United Kingdom business further by focusing even more on
customer centricity.
Following the successful Cofunds integration, Aegon has realized
its GBP 60 million in annualized expense savings target as Cofunds’
legacy systems were decommissioned, an office was closed, and other
operational efficiencies were realized. Aegon expects some residual
restructuring expenses into 2020 related to further expense savings
and additional economies of scale.
In December 2018, Aegon announced the expansion of its
partnership with Banco Santander in Portugal. The transaction has
been successfully closed in the second half of 2019 for a
consideration of EUR 20 million. Under the transaction, the
Portuguese joint ventures with Santander are expanded to the life
and non-life new business in the former Banco Popular network, as
well as the in-force business owned by Banco Popular’s insurance
subsidiaries. Since October 2018, the new business has been
recorded in Aegon’s Portuguese joint ventures, and in September and
October 2019 the in-force business has also been transferred.
Asia
Aegon has successfully completed the sale of its 50% stake in
the Japanese variable annuity joint ventures to partner Sony Life
in January 2020. Aegon announced the agreement to sell its 50%
stake in the variable annuity joint ventures in May 2019. The total
cash proceeds are EUR 153 million (JPY 18.75 billion). The book
gain under IFRS amounted to EUR 51 million and will be booked in
the first half of 2020.
In China, the Aegon THTF insurance joint venture is partnering
with a major e-commerce player to offer term life products on its
e-commerce platforms. The first product launch in October led to
sales of approximately USD 15 million, or about 45% of total Aegon
THTF sales in the fourth quarter of 2019. The success and
profitability of this product launch demonstrates the potential of
this e-commerce model.
Aegon Life in India secured a major e-commerce partnership with
Flipkart during the second half of the year, its third after
signing distribution agreements with MobiKwik and PayTM in the
first half of 2019. Aegon is the sole life insurance partner on the
Flipkart platform, with targeted launches for group term and retail
products in 2020.
Asset Management
Aegon Asset Management announced that it will integrate its
European and US businesses. This important step leverages its
extensive global resources to enhance customer outcomes and compete
more aggressively with other major global asset managers. This
final step to establish a globally integrated structure will see
the simplification of the current operating model moving from a
regional structure to one global operating management board headed
by Asset Management’s global chief executive Bas NieuweWeme. The
investment teams will be organized across four investment platforms
for which Aegon has uniquely differentiated capabilities and
believes it can be globally competitive - Fixed Income, Real
Assets, Equities and Multi-Asset & Solutions.
Responsible investing is a key element of Aegon Asset
Management’s strategy. In 2019, Aegon Asset Management was
recognized as a leading responsible and engaged investor by
independent organizations like ShareAction and the Principles for
Responsible Investment, and was ranked in the H&K Responsible
Investment Brand Index as one of 36 leading ESG fund managers in
Europe. Continuing its history of more than 30 years in providing
customers with innovative and tailored responsible investment
solutions, Aegon Asset Management launched the Sustainable Fixed
Income strategy to capture compelling opportunities from
sustainability investing. Aegon Asset Management continued
expanding its engagement activities, entering into more than 500
corporate dialogues on ESG issues globally last year.
Financial highlights
Underlying earnings before tax
Aegon’s underlying earnings before tax decreased by 5% to EUR
963 million compared with the second half of 2018. This was largely
the result of negative impacts from lower interest rates, tighter
credit spreads and portfolio updates on intangibles in the
Americas. Furthermore, refinancing of debt led to a change in the
recognition of interest expenses from equity to the income
statement, negatively impacting the result of the Holding. The
other reporting units showed growth in underlying earnings.
Underlying earnings from the Americas decreased by 11% to EUR
547 million. Excluding favorable currency effects, earnings
declined by 14%, due mostly to a EUR 49 million negative impact
from lower interest rates, tighter credit spreads and portfolio
updates on intangibles in the Life business. In addition,
worse-than-expected persistency for a block of 20-year level term
life business impacted earnings adversely by EUR 10 million.
Product exits in the Accident & Health business and lower
interest margins in Fixed Annuities also contributed to the
decrease of earnings. This was partly offset by favorable
Retirement Plans earnings driven by strong equity markets.
Underlying earnings before tax from Aegon’s operations in Europe
increased by 8% to EUR 437 million compared with the second half of
2018. The main contributor was the Netherlands, where earnings from
the Life and Service businesses increased, driven by lower
expenses, favorable claims experience and increased technical
margins. Earnings from Non-life benefited from favorable claims
experience, including a EUR 12 million reserve release in
individual disability insurance. For the United Kingdom, earnings
rose as a result of higher fee income in Digital Solutions. For
Southern and Eastern Europe (SEE), earnings were stable despite the
impact from the divestment of Aegon’s businesses in the Czech
Republic and Slovakia, which closed in January 2019. The
like-for-like earnings increase of 24% in SEE was mainly
attributable to Spain, driven by favorable claims experience and
expense savings.
Aegon’s underlying earnings in Asia increased by 27% to EUR 30
million. Excluding favorable currency movements, earnings increased
by 23%. The increase was mainly due to higher earnings from the
High-Net-Worth (HNW) businesses, as a result of higher surrender
charges, favorable mortality experience, and lower expenses.
Underlying earnings before tax from Aegon Asset Management rose
by 14% to EUR 79 million in the second half of 2019. This increase
was a result of higher earnings in Aegon’s Chinese asset management
joint venture Aegon Industrial Fund Management Company (AIFMC), and
the asset management businesses in Central & Eastern Europe.
For both regions, this was in part the result of increased
performance fees. These positive results more than offset lower fee
income as a result of outflows in the United Kingdom.
The result from the Holding declined to a loss of EUR 129
million, mainly as a result of increased project spend and a change
in recognition of interest expenses. Interest expenses for the USD
925 million Tier 2 securities issued on October 16, 2019 are
reported through the income statement, while the interest expenses
for the USD 1 billion grandfathered Tier 1 perpetual capital
securities redeemed on October 24, 2019 were recognized directly
through equity, until the announcement of the redemption. Combined
this led to an unfavorable impact on underlying earnings of EUR 17
million, despite the fact that the replacement resulted in EUR 15
million lower coupons on an annualized basis.
Net income
Net income increased significantly to EUR 910 million from EUR
253 million in the second half of 2018. This increase was mainly
driven by fair value gains and lower Other charges.
Fair value items
The gain from fair value items amounted to EUR 168 million for
the second half of 2019.
This was mostly driven by the results from fair value items in
the Americas amounting to a gain of EUR 115 million. This primarily
reflected a positive result on fair value investments, driven by a
mark-to-market gain from valuation updates of real estate
investment properties and more favorable equity markets than in the
same period last year, partly offset by alternative investments
underperformance.
The fair value items in the Netherlands, totaling a gain of EUR
94 million, are mainly driven by positive real estate revaluations,
a gain on the guarantee provision and gains on interest rate
hedges. The guarantee provision benefited from favorable market
movements and data updates, which more than offset the impact of
unfavorable credit spread movements.
Fair value losses in the United Kingdom totaled EUR 55 million,
and were mainly driven by losses on inflation and equity hedges in
place to protect the Solvency II position. In Southern and Eastern
Europe and in Asia, a total of EUR 8 million fair value gains were
reported.
Realized gains on investments
Realized gains on investments amounted to EUR 131 million,
primarily reflecting gains in the Americas. These were largely due
to bond calls and prepayments, mortgage loan gains, and normal
trading activity.
Net impairments
Net impairments amounted to a gain of EUR 17 million. This was
primarily driven by a gain of EUR 32 million for the Americas,
which in turn was mainly due to recoveries from multiple structured
assets, all of which were originally impaired between 2008 and
2013. The Netherlands recorded EUR 16 million of impairments,
mainly in the consumer loan portfolio of the bank.
Other charges
Other charges of EUR 188 million resulted from model and
assumption changes, restructuring charges, and strategic project
expenses.
Assumption updates in the Americas led to charges of EUR 75
million mainly from expense assumption updates. In the Netherlands,
model and assumption updates resulted in EUR 56 million charges
related to model enhancements and expense assumptions which more
than offset favorable longevity assumption changes.
Restructuring charges were in total EUR 124 million. In the
United Kingdom, EUR 52 million restructuring charges were driven by
Cofunds integration expenses and transition & conversion
charges related to the agreement with Atos for administration
services in the Existing Business. The Netherlands incurred EUR 46
million restructuring charges, which related mainly to the
restructuring of Aegon Bank, and to the transfer of the
administration of certain parts of the defined benefit book to TKP.
The Americas reported EUR 16 million restructuring charges, mainly
related to the TCS and LTCG operations administration
partnerships.
Furthermore, the Netherlands reported one-time expenses of EUR 6
million related strategic projects. Other charges in SEE, Asia and
Asset management totaled EUR 14 million. For the Holding, Other
charges amounted to EUR 53 million and predominantly related to
IFRS 9 / 17 project costs.
Other income mainly consists of a EUR 104 million provision
release related to the employee pension plan in the Netherlands,
and EUR 30 million in the United Kingdom mainly related to a
one-time provision release and income related to policyholder
tax.
Run-off businesses
The result from run-off businesses increased to a profit of EUR
15 million, driven mainly by higher income from the retained
individual life reinsurance business.
Income tax
Income tax amounted to a charge of EUR 195 million, while income
before tax was EUR 1,105 million, resulting in an effective tax
rate on income before tax of 17.6% in the second half of 2019. The
effective tax rate reflects tax exempt income and the use of tax
credits in the United States. It was also impacted favorably by
one-time tax benefits from the own employee pension plan moving
into surplus in the United Kingdom.
Return on equity
Return on equity decreased by 70 basis points compared with the
same period last year to 9.5% in the second half of 2019. The
decrease was mainly caused by lower underlying earnings before tax,
which were partly offset by one-time tax benefits.
Operating expenses
Operating expenses increased by 5% to EUR 2,011 million. This
mainly reflects investments to support growth and to build digital
and technological capabilities, higher IFRS 9 / 17 implementation
expenses, and higher restructuring cost.
Sales
Gross deposits increased by 38% to EUR 80 billion. This growth
can be largely attributed to Asset Management. Aegon’s Chinese
asset management joint venture, Aegon Industrial Fund Management
Company (AIFMC), recorded a significant increase of gross deposits
as a result of the success of new funds launched, and strong
inflows in money market funds. Gross deposits in the Americas of
EUR 18.8 billion were in line with the same period last year. In
Europe, gross deposits increased by 12% to EUR 13.4 billion as
gross deposits in the Netherlands were driven by continued momentum
at online bank Knab, and sales of new-style defined contribution
products, so-called Premium Pension Institute products. Gross
deposits in the United Kingdom increased slightly, as a slowdown in
retail business was offset by strong Workplace gross deposits due
to new business and ongoing regular premiums.
Net outflows amounted to EUR 22.5 billion for the second half of
2019 mainly due to contract discontinuances in Retirement Plans in
the Americas. These contracts were only marginally profitable, and
the impact to future earnings is limited. Variable Annuities and
Fixed Annuities also recorded net outflows as these businesses
continue to mature. For Europe, the United Kingdom had limited net
outflows, driven by the anticipated decline of the Existing
Business. These were offset by slightly improved net inflows in the
Netherlands, reflecting good sales at Knab and new-style defined
contribution pension products. For Asset Management, strong
third-party net flows were recorded, primarily from AIFMC as a
result of newly launched funds and continued business growth. 2019
was the eighth consecutive full year of positive external
third-party net inflows. This reflects Aegon Asset Management’s
competitive performance, together with management’s ability to
leverage scale and capabilities from the general account and
affiliate businesses.
New life sales rose by 15% to EUR 456 million. This was mainly
driven by Europe, where pension sales in the Netherlands were
strong following a pension buy-out deal and a purchase of
additional yearly pension increases by an existing customer. The
other main contributor was Asia, where Aegon’s insurance joint
venture in China increased sales as a result of a successful
product launch, leveraging the platform of a large e-commerce
partner.
New premium production for Accident & Health insurance
increased by 19% to EUR 113 million. This was predominantly driven
by the Americas as a result of onboarding a significant disability
contract, which more than offset lower other workplace voluntary
benefits sales and the previously announced strategic decision to
exit certain products. Europe added to the increased production by
a new accident product that was introduced in Spain. For property
& casualty insurance, new premium production increased by 6% to
EUR 64 million, driven by business growth in Spain.
Market consistent value of new business
Market consistent value of new business (MCVNB) decreased by 17%
to EUR 195 million. The decline was largely due to Variable
Annuities in the United States, reflecting the significant decline
in interest rates, which led to negative margins. This was
partially offset by higher MCVNB in the United Kingdom, primarily
from higher margins on workplace business.
Revenue-generating investments
Revenue-generating investments increased by 3% during the second
half of 2019 to EUR 898 billion. This reflects primarily favorable
market movements, which more than offset net outflows.
Shareholders’ equity
Shareholders’ equity increased by EUR 1.0 billion in the second
half of 2019 to EUR 22.5 billion on December 31, 2019. This was
driven by higher revaluation reserves due to lower interest rates,
and increased retained earnings which more than offset the impact
of low interest rates on the remeasurement of the defined benefit
obligations. Shareholders’ equity excluding revaluation reserves
increased by EUR 0.4 billion to EUR 16.7 billion – or EUR 8.06 per
common share – at the end of 2019.
Gross financial leverage ratio
The gross financial leverage ratio improved by 80 basis points
to 28.5% in the second half of 2019, which is within Aegon’s 26% –
30% target range. In the second half of 2019, Aegon successfully
issued USD 925 million Tier 2 securities, with a fixed coupon of
5.1%. The proceeds were used to redeem USD 1 billion grandfathered
Tier 1 securities with a coupon of 6.375%. In addition, EUR 75
million of senior debt matured in the second half of 2019. This
reduction in leverage, in combination with higher shareholders’
equity excluding revaluation reserves, resulted in the improvement
of the gross financial leverage ratio.
Holding excess cash
Aegon’s holding excess cash position decreased from EUR 1,632
million to EUR 1,192 million during the second half of the year,
which is within the target range of EUR 1.0 billion to EUR 1.5
billion. The decline resulted mainly from dividends to
shareholders, deleveraging, and holding funding and operating
expenses more than offsetting gross remittances from
subsidiaries.
The group received EUR 595 million gross remittances from
subsidiaries, of which EUR 406 million came from the Americas, EUR
139 million from Europe, EUR 27 million from Asia and EUR 20
million from Asset Management. While Aegon the Netherlands retained
its planned remittances in 2019, following management actions it
was within its Solvency II target range at year end, and remitted
EUR 100 million to the Group in February 2020.
Capital injections of EUR 254 million primarily related to
investments in business growth and earn-out payments in Europe. In
Spain, EUR 115 million of earn-outs were paid to Santander, related
to the performance of the joint venture since the start of the
partnership in 2013. Furthermore, Aegon Spain received EUR 75
million of capital injections to ensure that all legal entities’
Solvency II ratios remained in the target zone, as transitionals
and matching adjustments are no longer used. Other capital
injections of EUR 63 million were mainly to fund business growth in
the bank in the Netherlands, and Aegon’s Chinese insurance joint
venture, Aegon THTF.
In the second half of 2019, EUR 456 million holding excess cash
was deployed for the cash portion of the interim 2019 dividend, and
the share buybacks aimed to prevent the dilutive effect from 2018
final and 2019 interim stock dividend. Debt deleveraging, including
the associated expenses, decreased holding excess cash by EUR 159
million in total. The remaining cash outflows of EUR 166 million
mainly related to holding funding and operating expenses.
Capital generation
Capital generation after holding expenses amounted to EUR 1,183
million for the second half of 2019. This included favorable
one-time items of EUR 304 million and positive market movements of
EUR 24 million in total. As a consequence, normalized capital
generation amounted to EUR 855 million which is 6% higher than in
the second half of 2018. Growth in capital generation was mainly
driven by a higher release of required capital in the Americas and
by positive experience variances in the Netherlands. One-time items
included positive management actions, most notably the longevity
reinsurance transaction in the Netherlands, which were partly
offset by unfavorable model and assumption changes.
Solvency II ratio
Aegon’s Group Solvency II ratio increased from 197% to 201%
during the second half of 2019, and is now above the target zone of
150% – 200%. The ratio increased primarily due to strong normalized
capital generation and the positive effect of management actions
lowering the risk profile of the Group. The increase was partly
offset by the external dividend payments, the negative impact of
model and assumption changes, and the impact of a lower
diversification benefit at Group level resulting from market
movements and changes to hedging programs.
The estimated RBC ratio in the United States remained stable at
470% on December 31, 2019, compared to 472% on June 30, 2019, and
is far above the bottom-end of the target range of 350%. The
positive impacts from management actions, such as the merger of
Transamerica Advisors Life Insurance Company and Transamerica Life
Insurance Company, were partly offset by statutory expense
assumption changes and dividend payments by the US regulated
entities to the US holding company in excess of capital generation.
This is in line with the annual pattern of dividend payments to the
US holding and was in part used for a contribution to the own
employee pension plan.
The estimated Solvency II ratio in the Netherlands increased to
171% on December 31, 2019, from 152% on June 30, 2019. This was
mainly the result of management actions and normalized capital
generation. As a result, the Netherlands is back above the
bottom-end of its target range of 155%. The main management action
was the longevity reinsurance transaction with Canada Life
Reinsurance, which led to significantly lower required capital. In
addition, a number of derisking actions were performed on the asset
portfolio. The Solvency II ratio was negatively impacted by model
and assumption changes. These included the negative impact from
model enhancements and expense assumption changes, which more than
offset favorable longevity assumption changes. Furthermore, the
factor applied when calculating the loss-absorbing capacity of
deferred taxes (LAC-DT) was lowered from 75% to 65%, mainly as a
consequence of lower interest rates, leading to a negative impact
on the Solvency II ratio. Market movements led to a positive
impact. The positive impact from mortgage spread tightening was
partly offset by a lowering of the EIOPA volatility adjuster, and
adverse sovereign and corporate bond spread movements. The latter
was driven by a decrease in the spreads used, as part of a tailored
methodology, to determine the liabilities related to the own
employee pension plan. In addition, lower interest rates led to a
slight negative impact as a result of an increase in required
capital.
The estimated Solvency II ratio in the United Kingdom decreased
to 157% on December 31, 2019, from 165% on June 30, and remained
above the bottom-end of the target range of 145%. The decrease was
driven by a negative impact from assumption updates, mainly due to
expense assumptions, and the remittance to the Holding. These
impacts more than offset normalized capital generation.
Final 2019 dividend
Aegon aims to pay out a sustainable dividend to allow equity
investors to participate in Aegon’s performance, which can grow
over time if Aegon’s performance so allows. At the Annual General
Meeting of Shareholders on May 15, 2020, the Supervisory Board
will, in the absence of unforeseen circumstances, propose a final
dividend for 2019 of EUR 0.16 per common share. If approved, and in
combination with the interim dividend of EUR 0.15 per share paid
over the first half of 2019, Aegon’s total dividend over 2019 will
amount to EUR 0.31 per common share. This is an increase of EUR
0.02 per share or 7% compared with the 2018 dividend. The final
dividend will be paid in cash or stock at the election of the
shareholder. The value of the stock dividend will be approximately
equal to the cash dividend. Aegon intends to neutralize the
dilutive effect of the final 2019 stock dividend on earnings per
share in the third quarter of 2020, barring unforeseen
circumstances.
If the proposed dividend is approved by shareholders, Aegon
shares will be quoted ex-dividend on May 19, 2020. The record date
for the dividend will be May 20, 2020. The election period for
shareholders will run from May 26 up to and including June 12,
2020. The stock fraction will be based on the average share price
on Euronext Amsterdam from June 8 until June 12, 2020. The stock
dividend ratio will be made public on June 12, 2020, and the
dividend will be payable as of June 19, 2020.
Aegon N.V.
Holding excess
cash
2018
2019
EUR millions First half Second half Full Year First half Second
half Full Year
Beginning of period
1,354
1,923
1,354
1,274
1,632
1,274
Dividends received
593
786
1,379
639
595
1,234
Divestments
196
-
196
131
-
131
Gross remittances
788
786
1,575
770
595
1,365
Capital injections
(87)
(57)
(144)
(147)
(254)
(401)
Acquisitions
-
(97)
(97)
-
-
-
Net capital flows to the holding
701
632
1,333
622
342
964
Funding and operating expenses
(163)
(170)
(333)
(142)
(169)
(312)
Dividends and share buybacks
(167)
(410)
(577)
(170)
(456)
(626)
Leverage issuances / (redemptions)
200
(700)
(500)
51
(159)
(108)
Other
(2)
(2)
(3)
(3)
3
0
Holding expenses and capital return
(132)
(1,281)
(1,413)
(264)
(781)
(1,046)
End of period
1,923
1,274
1,274
1,632
1,192
1,192
Aegon N.V.
Solvency II ratio
Dec. 31, June 30, Dec. 31, EUR millions Notes
2019
2019
2018
Eligible Own Funds
18,470
17,679
17,602
Consolidated Group SCR
9,167
8,996
8,349
Solvency II ratio 11b,
12
201%
197%
211%
Eligible Own Funds to meet
MCR
7,108
6,296
7,335
Minimum Capital Requirement (MCR)
2,244
2,150
1,965
MCR ratio
317%
293%
373%
United States - RBC ratio
470%
472%
465%
The Netherlands - Solvency II ratio *
171%
152%
181%
United Kingdom - Solvency II ratio
157%
165%
184%
* Please note that as per 1H 2019, Aegon Bank is excluded from the
Solvency II ratio of Aegon NL.
Additional information
Full version press release
Use this link for the full version of the press release.
Presentation
The conference call presentation is available on aegon.com as of
7.30 a.m. CET.
Supplements
Aegon’s 2H 2019 Financial Supplement is available on
aegon.com.
Conference call including Q&A
9:00 a.m. CET
Audio webcast on aegon.com
Dial-in numbers
United States: +1 720 543 0206
United Kingdom: +44 (0)330 336 9411
The Netherlands: +31 (0) 20 703 8261
Passcode: 1180188
Two hours after the conference call, a replay will be available
on aegon.com.
Publication dates 2020 results
First half year 2020 – August
13, 2020
Second half year 2020 –
February 11, 2021
About Aegon
Aegon’s roots go back 175 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
achieve a lifetime of financial security. More information on
aegon.com/about.
Notes (1 of 2):
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. Aegon
segment reporting is based on the businesses as presented in
internal reports that are regularly reviewed by the Executive Board
which is regarded as the chief operating decision maker. For
Europe, the underlying businesses (the Netherlands, United Kingdom
and Southern & Eastern Europe) are separate operating segments
which under IFRS 8 cannot be aggregated, therefore further details
will be provided for these operating segments in the Europe
section. The following table provides the reconciliation from the
non-IFRS-EU measures underlying earnings before tax, income tax and
income before tax to the most comparable IFRS-EU measure.
Segment information
Second half 2019 Second half 2018 EUR millions Segment total Joint
ventures and associates eliminations Consolidated Segment total
Joint ventures and associates eliminations Consolidated
Net
Underlying earnings
818
48
866
891
67
957
Tax on underlying earnings
(145)
24
(121)
(119)
20
(99)
Underlying earnings before tax
963
24
986
1,010
47
1,056
Fair value items
168
(46)
122
(257)
(67)
(324)
Realized gains / (losses) on investments
131
(2)
129
(10)
(0)
(10)
Impairment charges
(41)
0
(41)
(32)
0
(32)
Impairment reversals
58
-
58
13
-
13
Other income / (charges)
(188)
0
(188)
(581)
1
(580)
Run-off businesses
15
-
15
(7)
-
(7)
Income / (loss) before tax
1,105
(24)
1,081
136
(20)
116
Income tax from certain proportionately consolidated joint ventures
and associates included in income before tax
24
(24)
-
20
(20)
-
Income tax (expense) / benefit
(195)
24
(171)
117
20
137
Of which income tax from certain proportionately consolidated joint
ventures and associates included in income before tax
(24)
24
-
(20)
20
-
Net income / (loss)
910
-
910
253
-
253
Segment
information
Full year 2019 Full year 2018 EUR
millions Segment total Joint ventures and associates eliminations
Consolidated Segment total Joint ventures and associates
eliminations Consolidated
Net Underlying earnings
1,651
95
1,746
1,754
119
1,873
Tax on underlying earnings
(322)
45
(277)
(320)
47
(273)
Underlying earnings before tax
1,973
50
2,023
2,074
72
2,146
Fair value items
(226)
(88)
(314)
(260)
(119)
(379)
Realized gains / (losses) on investments
405
(2)
403
(77)
(2)
(79)
Impairment charges
(95)
0
(95)
(58)
0
(58)
Impairment reversals
73
-
73
39
-
39
Other income / (charges)
(281)
0
(281)
(875)
1
(874)
Run-off businesses
23
-
23
(14)
-
(14)
Income / (loss) before tax
1,872
(40)
1,832
829
(47)
782
Income tax from certain proportionately consolidated joint ventures
and associates included in income before tax
40
(40)
-
47
(47)
-
Income tax (expense) / benefit
(344)
40
(304)
(84)
47
(37)
Of which income tax from certain proportionately consolidated joint
ventures and associates included in income before tax
(40)
40
-
(47)
47
-
Net income / (loss)
1,528
-
1,528
744
-
744
Notes (2 of 2):
2)
New life sales is defined as new recurring premiums plus 1/10 of
single premiums.
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 Swap curve is extrapolated
beyond the last liquid point to an ultimate forward rate. 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 non-financial
risks and the costs of non-hedgeable stranded capital.
4)
Return on equity is a ratio calculated by dividing the net
underlying earnings after cost of leverage, by the average
shareholders' equity excluding the revaluation reserve and cash
flow hedge reserve.
5)
Included in Other income/(charges) are income/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 for UK.
7)
APE = recurring premium + 1/10 single premium.
8)
PVNBP: Present value of new business premiums (PVNBP) are 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). The Swap curve is
extrapolated beyond the last liquid point to an ultimate forward
rate.
9)
Reconciliation of operating expenses, used for segment reporting,
to Aegon's IFRS based operating expenses.
Second half 2019 Full Year 2019
Employee expenses
1,072
2,149
Administrative expenses
816
1,537
Operating expenses for IFRS reporting
1,888
3,686
Operating expenses related to jv's and associates
123
243
Operating expenses in earnings release
2,011
3,929
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.
11a)
Capital Generation reflects 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. Capital Generation is defined as
the capital generated in a local operating unit measured as the
change in the local binding capital metric (according to Aegon’s
Capital Management Policy) for that period and after investments in
new business. Capital Generation 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 Capital Generation provides meaningful
information to investors regarding capital generated on a net basis
by Aegon’s operations that may be available at the holding company.
Because elements of Capital Generation 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 Capital
Generation.
11b)
The calculation of the Solvency II capital surplus and ratio are
based on Solvency II requirements. For insurance entities in
Solvency II equivalent regimes (United States, Bermuda and Brazil)
local regulatory solvency measurements are used. Specifically,
required capital for the regulated entities in the US is calculated
as one and a half times (150%) the upper end of the Company Action
Level range (200% of Authorized Control Level) as applied by the
National Association of Insurance Commissioners in the US, while
the own funds is calculated by applying a haircut to available
capital under the local regulatory solvency measurement of one time
(100%) the upper end of the Company Action Level range. For
entities in financial sectors other than the insurance sector, the
solvency requirements of the appropriate regulatory framework are
taken into account in the group ratio. The group ratio does not
include Aegon Bank N.V. As the UK With-Profit funds is ring fenced,
no surplus is taken into account regarding the UK With-Profit funds
for Aegon UK and Group numbers.
12)
The solvency II ratio reflects Aegon’s interpretation of Solvency
II requirements which is subject to supervisory review.
13)
The results in this release are unaudited.
Cautionary note regarding non-IFRS-EU measures
This document includes the
following non-IFRS-EU financial measures: underlying earnings
before tax, income tax, income before tax, market consistent value
of new business and return on equity. These non-IFRS-EU 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
and return on equity, to the most comparable IFRS-EU measure is
provided in the notes to this press release. Market consistent
value of new business is not based on IFRS-EU, which are used to
report Aegon’s primary financial statements and should not be
viewed as a substitute for IFRS-EU financial measures. Aegon may
define and calculate market consistent value of new business
differently than other companies. Return on equity is a ratio using
a non-IFRS-EU measure and is calculated by dividing the net
underlying earnings after cost of leverage by the average
shareholders’ equity adjusted for the revaluation reserve. Aegon
believes that these non-IFRS-EU measures, together with the IFRS-EU
information, provide meaningful supplemental information about the
underlying operating results of Aegon’s business including insight
into the financial measures that senior management uses in managing
the business.
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 Asia, and in 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, could, 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 and/or governmental 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 public
sector securities and the resulting decline in the value of
government exposure that Aegon holds;
- Changes in the performance of Aegon’s investment portfolio and
decline in ratings of Aegon’s counterparties;
- 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 written premium, 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;
- 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;
- Catastrophic events, either manmade or by nature, including by
way of example acts of God, acts of terrorism, acts of war and
pandemics, could result in material losses and significantly
interrupt Aegon’s business;
- 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;
- Aegon’s projected results are highly sensitive to complex
mathematical models of financial markets, mortality, longevity, and
other dynamic systems subject to shocks and unpredictable
volatility. Should assumptions to these models later prove
incorrect, or should errors in those models escape the controls in
place to detect them, future performance will vary from projected
results;
- Reinsurers to whom Aegon has ceded significant underwriting
risks may fail to meet their obligations;
- Changes in customer behavior and public opinion in general
related to, among other things, the type of products Aegon sells,
including legal, regulatory or commercial necessity to meet
changing customer expectations;
- Customer responsiveness to both new products and distribution
channels;
- As Aegon’s operations support complex transactions and are
highly dependent on the proper functioning of information
technology, operational risks such as system disruptions or
failures, security or data privacy breaches, cyberattacks, human
error, failure to safeguard personally identifiable information,
changes in operational practices or inadequate controls including
with respect to third parties with which we do business may disrupt
Aegon’s business, damage its reputation and adversely affect its
results of operations, financial condition and cash flows;
- 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;
- Aegon’s failure to achieve anticipated levels of earnings or
operational efficiencies as well as other cost saving and excess
cash and leverage ratio management initiatives;
- Changes in the policies of central banks and/or
governments;
- Litigation or regulatory action that could require Aegon to pay
significant damages or change the way Aegon does business;
- Competitive, legal, regulatory, or tax changes that affect
profitability, the distribution cost of or demand for Aegon’s
products;
- Consequences of an actual or potential break-up of the European
monetary union in whole or in part, or the exit of the United
Kingdom from the European Union and potential consequences if other
European Union countries leave the European Union;
- Changes in laws and regulations, particularly those affecting
Aegon’s operations’ ability to hire and retain key personnel,
taxation of Aegon companies, the products Aegon sells, and the
attractiveness of certain products to its consumers;
- Regulatory changes relating to the pensions, investment, and
insurance industries in the jurisdictions in which Aegon
operates;
- Standard setting initiatives of supranational standard setting
bodies such as the Financial Stability Board and the International
Association of Insurance Supervisors or changes to such standards
that may have an impact on regional (such as EU), national or US
federal or state level financial regulation or the application
thereof to Aegon, including the designation of Aegon by the
Financial Stability Board as a Global Systemically Important
Insurer (G-SII); and
- Changes in accounting regulations and policies or a change by
Aegon in applying such regulations and policies, voluntarily or
otherwise, which may affect Aegon’s reported results, shareholders’
equity or regulatory capital adequacy levels.
This document contains information that qualifies, or may
qualify, as inside information within the meaning of Article 7(1)
of the EU Market Abuse Regulation (596/2014). 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200212006020/en/
Media relations Dick Schiethart +31 (0) 70 344 8821
gcc@aegon.com
Investor relations Jan Willem Weidema +31 (0) 70 344 8028
ir@aegon.com
Conference call including Q&A (9:00 a.m. CET) Audio webcast
on aegon.com United States: +1 720 543 0206 United Kingdom: +44
(0)330 336 9411 The Netherlands: +31 (0) 20 703 8261 Passcode:
1180188
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