8 Condensed
consolidated interim financial statements 1Q 2021 Results
2.2. Future adoption of new IFRS-EU accounting
standards and amendments
For a complete overview of IFRS standards and amendments issued before January 1, 2021, which will be applied in future
years and were not early adopted by the Group, please refer to Aegons Integrated Annual Report for 2020.
In February 2021, the IASB issued the following
amendments:
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Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2); and
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Definition of Accounting Estimates (Amendments to IAS 8).
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These amendments are effective for annual reporting periods beginning on or after January 1, 2023, with early application permitted and have not been endorsed by
the European Union. Aegon is assessing the impact of these amendments.
In March 2021, the IASB issued the Covid-19-Related Rent Concessions beyond 30 June 2021 (Amendment to IFRS 16). The amendment is effective for annual reporting periods beginning on or after April 1, 2021, with early
application permitted and has not been endorsed by the European Union. Impact of this amendment is not expected to be significant.
2.3.
Judgments and critical accounting estimates
Preparing the condensed consolidated interim financial statements requires management to make judgments,
estimates and assumptions, including the likelihood, timing or amount of future transactions or events, that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. These estimates are
inherently subject to change and actual results could differ from those estimates.
Uncertainty resulting from COVID-19
During 1Q 2021 the COVID-19 pandemic continued to cause significant disruption to business, markets, and the industry.
In 1Q 2021 Aegons operating result in the Americas was impacted by USD 166 million of adverse mortality in Life, of which USD 95 million of claims are directly attributable to COVID-19 as the
cause of death. This was offset by favorable morbidity experience in Accident & Health and is mostly related to Long-Term Care insurance with higher claims terminations due to higher mortality and discharges from care facilities. As soon as
the impacts of the COVID-19 pandemic subside, Aegon expects the number of new Long-Term care claims to reverse. Aegon continues to monitor the relevant market and the economic factors to proactively manage the
associated risks. Management believes that the most significant risks are related to financial markets (particularly credit, equity, and interest rates risks) and underwriting risks (particularly related to mortality, morbidity, and policyholder
behavior).
Actuarial and economic assumptions
Aegon the Netherlands
has updated the indexation assumption for a specific pensions portfolio linked to Dutch industry pension funds after a sharp rise of the price inflation curve. Instead of a historical analysis, the substantiation of the updated indexation assumption
will be based on a new forward-looking method that also takes into account the drivers (coverage ratio, asset mix, expected returns) for indexation pay-out by industry pension funds. The updated indexation
assumption resulted in a lower market value liability of EUR 75 million. The release of the liability has been recorded as part of Benefits and expenses and in Other income for segment reporting purposes.
Sensitivities
Sensitivity on variable
annuities and variable life insurance products in the United States
Sensitivities of Aegons variable annuities and variable life insurance products in
the United States on expected long-term equity growth rate have not significantly changed compared to the sensitivities as reported in the Aegons 2020 Integrated Annual Report, except for sensitivities to mortality assumption and lapse rate.
A relative increase of 10% to the mortality assumption, dependent on product and characteristics of the block of business, would reduce net result by
approximately EUR 181 million (December 31, 2020: EUR 124 million). A relative 20% increase in the lapse rate assumption would increase net result by approximately EUR 38 million (December 31, 2020: EUR 89 million).
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Unaudited
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