AEG Aegon Ltd

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 2021

AEGON N.V.

Aegonplein

50 2591 TV THE HAGUE

The Netherlands

Aegon’s press release, dated May 12, 2021, is included as appendix and incorporated herein by reference.

The Hague – May 12, 2021

Aegon reports first quarter 2021 results

Strong progress on expense savings program and plans to improve risk profile

Statement of Lard Friese, CEO

“We have made early progress toward delivering on our strategic priorities, and I am encouraged to see this reflected in our first quarter results. Despite the pandemic, our employees remain committed to support our customers and business partners. I continue to be deeply impressed by the energy that they bring to transform Aegon into a more focused, high-performance company.

The first quarter of 2021 saw an increase in the operating result driven by improvements in the United States, the Netherlands and Asset Management. So far, we have reduced the addressable expense base across the Group by EUR 136 million and are on track to deliver half of our 2023 target of EUR 400 million expense savings by the end of 2021. Our balance sheet remains strong, with the capital ratios of all three main units and the Holding around or above their operating levels.

We have made solid progress on our plans to transform Aegon. During the first quarter, we further increased our strategic focus by divesting the Transamerica Ventures fund and closing the sale of Stonebridge.

In our Strategic Assets, we continue to invest in new products, product distribution and customer service. In the first quarter, we gained momentum from improved sales performance in each of our core markets. A prime example is in the US Individual Solutions business, where we grew the number of licensed agents in our main distribution channel by 18%, and saw increases in our market share there as a consequence of new product introductions.

We have also taken concrete actions to improve our risk profile, already executing on more than half of our plan to reduce interest rate risk in the United States. Furthermore, we took advantage of higher interest rates to implement a new interest rate hedge as an important step towards expanding the dynamic hedge to our legacy variable annuity block in the United States.

We have made steady progress managing our Financial Assets during the first quarter. In our US business, we reduced the sensitivity of our Variable Annuities business to interest rates, and so far have achieved one third of the targeted Long Term Care rate increases.

While ongoing global uncertainty remains, we’ve also begun to see the successful rollout of vaccination programs in most of the markets in which we operate, giving renewed hope to many, as we continue on the path out of the pandemic. Our hearts especially go out to our colleagues, customers, business partners and the broader communities in India and Brazil that are struggling with the devastating challenges of COVID-19. Looking to the future, I am confident in the strength of our business, our strategy, and the unwavering commitment of our employees to continue delivering on our plans.”

Note: All comparisons in this release are against 1Q 2020, unless stated otherwise. See page 7 of this press release for a full financial overview.

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Strategic highlights

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Aegon’s strategy

Aegon is taking significant steps to transform the company in order to improve its performance and create value for its customers and shareholders. To ensure delivery against these objectives, a rigorous and granular operating plan has been developed across the Group. Aegon focuses on three core markets (the United States, the Netherlands, and the United Kingdom), three growth markets (Spain & Portugal, China, and Brazil) and one global asset manager. Aegon’s businesses within its core markets have been separated into Financial Assets and Strategic Assets. The aim is to release capital from Financial Assets and from businesses outside its core and growth markets, and re-allocate capital to growth opportunities in the Strategic Assets, growth markets and Asset Management. Throughout this transformation, the company aims to maintain a solid capital position in the business units and at the Holding. Through proactive risk management actions, Aegon is improving its risk profile and reducing the volatility of its capital ratios.

Operational improvement plan

Aegon has an ambitious plan comprised of more than 1,100 detailed initiatives designed to improve the operating performance of its business by reducing costs, expanding margins and growing profitably. In the trailing four quarters, expense savings initiatives have led to a reduction in addressable expenses by EUR 136 million compared with the addressable expenses in the base year 2019. A total of 418 initiatives have been executed between the launch of the operational improvement plan and the end of the first quarter 2021, of which 342 are related to expense savings. Based on the progress to date, Aegon remains on track to deliver half of the 2023 target of EUR 400 million reduction in addressable expenses by the end of 2021. Aegon is also starting to see the benefits from the growth initiatives, which are aimed at improving customer service, enhancing user experience and developing new products. The company will continue at pace in its execution of the expense and growth initiatives.

Strategic Assets

Strategic Assets are businesses with a greater potential for an attractive return on capital, and where Aegon is well positioned for growth. In these businesses, Aegon will invest in profitable growth by expanding its customer base and increasing its margins.

In the US Individual Solutions business, Transamerica’s aim is to achieve a top-5 position in Term Life, Whole Life Final Expense, and Indexed Universal Life through profitable sales growth. New life sales in the first quarter of 2021 amounted to USD 83 million, which represents an increase of 27% compared with the same period last year. This was mainly driven by an increase in new sales of Indexed Universal Life. Transamerica is benefiting from an 18% increase in licensed agents at World Financial Group (WFG) and a higher market share in this affiliate distribution channel from the addition of a funeral planning benefit to Indexed Universal Life products for qualifying life insurance policyholders. Transamerica developed this new benefit to provide grieving beneficiaries valuable resources in helping the insured person’s family plan end-of-life services. The market consistent value of new business for Life increased by 83% compared with the same period last year to USD 68 million in the first quarter of 2021. This was in part driven by a more favorable product mix resulting from the addition of the funeral planning benefit.

In the US Workplace Solutions business, Transamerica aims to compete as a top-5 player in new sales in the Middle-Market segment of Retirement Plans. Momentum is building here with written sales of USD 1.1 billion in the first quarter of 2021, representing an increase of 27% compared with the same period last year. This increase was supported by contract wins in the Pooled Plan Arrangements, which is a strategic growth driver. Middle-Market net deposits in the first quarter amounted to USD 194 million, an improvement compared with USD 63 million net outflows in the same period last year. This improvement reflects increased customer deposits generated through existing advisors following targeted campaigns.

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Aegon is the largest third-party mortgage originator in the Netherlands, benefiting from its scale, high service levels to intermediaries and customers, and diversified funding. In the first quarter of 2021, the company originated EUR 3.0 billion of residential mortgages, while further increasing its customer relational NPS scores. This volume was in part driven by the strong housing market and the increased demand for mortgage refinancing in light of the current interest rate environment. Two thirds thereof consisted of fee-based mortgages originated for third-party investors. On March 31, 2021, Aegon successfully priced a EUR 657 million residential mortgage-backed securitization to further diversify its mortgage funding. The transaction was oversubscribed three times by investors.

Net deposits for the Workplace Solutions defined contribution products (PPI) in the Netherlands increased by 14% to EUR 173 million in the first quarter of 2021. Aegon’s defined contribution offering is low-cost thanks to the scale of its administration subsidiary, TKP. Aegon expects its online bank Knab to continue its development into a digital gateway for individual retirement solutions. In the first quarter of 2021, the online bank grew its customer base by 11,000 and over 90% of all its customers are using the bank’s mobile app.

In the first quarter of 2021, Aegon’s business in the United Kingdom achieved record gross deposits across the business excluding the Institutional channel, with significant contributions from both the Workplace and Retail channels in the platform. Net deposits in Workplace remained positive at GBP 295 million. There have been a number of notable Workplace proposition enhancements in recent months, and downloads of Aegon’s Workplace app surpassed 20,000 following its recent launch. Net outflows in Retail amounted to GBP 42 million, which is a significant improvement compared with the first quarter of 2020. This resulted from platform proposition enhancements and strong investor sentiment. Aegon aims to mitigate the top-line impact from the gradual run-off of its traditional product portfolio – which is the driver behind annualized revenues lost for the first quarter – by profitably growing its platform business, and by reducing expenses. Expense initiatives and the favorable impact from market movements on assets have led to an improvement in efficiency with platform expenses over assets under administration decreasing by 3 basis points compared with the first quarter of last year to 22 basis points.

Financial Assets

Financial Assets are blocks of business which have closed or will be closed for new sales, and which are capital intensive with relatively low returns on capital employed. Aegon has established dedicated teams to manage these businesses, who are responsible for maximizing their value through disciplined risk management and capital management actions.

In December 2020, Aegon announced that Transamerica would stop selling variable annuities with significant interest rate sensitive living and death benefit riders, fixed index annuities, and stand-alone individual Long-Term Care. At the end of March 2021, Transamerica had closed the impacted annuity products to new sales and stopped accepting applications for individual standalone Long-Term Care policies. Transamerica will continue to serve the retirement needs of individuals with products like accumulation variable annuities with limited interest rate sensitivity. To this end the company recently launched the Transamerica Principal Optimizer^SM rider. This is a product that offers customers protection of their principal investment combined with the potential of investment growth.

In the first quarter of 2021, Transamerica continued its successful track record of dynamically hedging the in-force block of variable annuity business with guaranteed minimum withdrawal benefits (GMWB) for equity and interest rate risk, with a hedge effectiveness of 98%. The company expects to expand the dynamic hedge program to its legacy variable annuities block with income and death benefit riders in the second half of 2021.

The primary management action regarding Transamerica’s Long-Term Care block is a rate increase program with a value of USD 300 million. In the first quarter of 2021, the company obtained regulatory approvals for rate increases worth USD 112 million. Furthermore, claims experience developed favorably for the Long-Term Care business as a result of increased claims terminations due to the impact of the COVID-19 pandemic, leading to an actual to expected claims experience of 43% for the first quarter of 2021. As soon as the impacts of the COVID-19 pandemic subside, Aegon expects the number of new Long-Term Care claims to revert to normal levels.

The newly established team that is dedicated to managing the Dutch Life business is actively managing risks and the capital positions to enhance the consistency of remittances to the Group. The business implemented a quarterly remittance policy in the fourth quarter of 2020, and again remitted EUR 25 million in the first quarter of 2021. The Solvency II ratio of the Dutch Life business stood at 149% at the end of the first quarter, which is around the operating level of 150%.

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Growth Markets and Asset Management

In its Growth Markets, Aegon will continue to invest in profitable growth. In the first quarter of 2021 the market consistent value of new business (MCVNB) from life products increased by 21% to EUR 32 million. This was mainly driven by a more favorable business mix in China. New premium production for property & casualty and accident & health insurance increased by EUR 9 million to EUR 29 million as a result of new products launched in Spain & Portugal.

Aegon Asset Management aims to significantly increase the operating margin of its Global Platforms by improving efficiency and driving growth. Third-party net deposits on the Global Platforms were EUR 0.1 billion in the first quarter of 2021, driven by strong net deposits on the Fixed income platform, and continues to build on Aegon’s track record of positive third-party net deposits. The operating margin of its Global Platforms increased by 4 percentage points compared with the first quarter of 2020. To reduce expenses and enhance the quality of customer service, Aegon Asset Management migrated the administration of its fiduciary business from a dedicated platform to existing systems used in other parts of its business.

Smaller, niche or sub-scale businesses

In small markets or markets where Aegon has sub-scale or niche positions, capital will be managed tightly with a bias to exit.

In January 2021, together with its joint venture partner, Aegon decided to cease funding of GoBear, a digital financial supermarket in Southeast Asia. Subsequently, GoBear’s brand and e-lending business have been sold to different strategic buyers so as to achieve a controlled and swift exit from the business. These transactions will not have a material impact on the company’s capital position and results.

On March 1, 2021, Aegon announced the completion of the sale of Stonebridge, a UK-based provider of accident insurance products, to Global Premium Holdings group, part of Embignell group. Proceeds of GBP 35 million were received in the second half of 2020 and GBP 23 million in the first quarter of 2021. The total proceeds are equal to one times Stonebridge’s Solvency II Own Funds at year-end 2019.

On March 31, 2021, Transamerica announced that it had reached an agreement to sell its portfolio of fintech and insurtech companies to Swiss-based private equity firm Montana Capital Partners. Following the transaction, Transamerica will continue to work with the portfolio companies. The transaction closed on April 27, 2021 and will have a positive impact on Cash Capital at the Holding in the second quarter of 2021.

Aegon has taken note of an announcement issued by Vienna Insurance Group AG Wiener Versicherung Gruppe (VIG) on April 7, 2021. The announcement issued by VIG reads as follows: “Acquisition of the Aegon entities prevented by Hungary for the moment. VIENNA INSURANCE GROUP AG Wiener Versicherung Gruppe received a decree yesterday afternoon in which the Hungarian Ministry of the Interior announced that the intended acquisition by a foreign investor of the Aegon companies in Hungary is denied. As part of the approval process, Vienna Insurance Group has been in constructive talks with the responsible Hungarian Minister of Finance since January 2021. The decree is in contradiction with the course of the talks to date. Vienna Insurance Group expects that this issue will be resolved positively in the near future.” Aegon will continue to work with VIG to close the transaction.

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Strengthening the balance sheet

Aegon aims to continue strengthening its balance sheet, and is taking proactive management actions to improve its risk profile and reduce the volatility of its capital ratios.

At the Capital Markets Day on December 10, 2020, Aegon announced its plans to reduce its economic interest rate exposure in the United States by one third to one half to lessen its dependency on financial markets and improve its risk profile. At the end of the first quarter of 2021, Aegon had already executed more than half of this plan through management actions, primarily by lengthening the duration of its asset portfolio. Furthermore, Aegon has taken advantage of higher interest rates in the United States by implementing a macro interest rate hedge in the second half of March 2021 at the prevailing interest rates. This hedge covers part of Aegon’s remaining economic interest rate exposure, representing approximately one third of the interest rate exposure associated with the legacy variable annuity block with income and death benefit riders. This measure will mitigate the potential capital impact from the expansion of Aegon’s dynamic hedge to the legacy variable annuity block, were interest rates to decline from those levels. Aegon is making good progress on the expansion of the dynamic hedge. At its second quarter 2021 results, Aegon will provide an update on the plans for implementation of the expansion of the dynamic hedge.

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Note: In 2021, the result of Central & Eastern Europe has been reclassified from operating result to Other income following the announced divestment of the business.

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Capital generation

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The Hague – May 12, 2021

Operating result

Aegon’s operating result increased by 20% compared with the first quarter of 2020 to EUR 431 million. This was mainly driven by expense savings and the benefit from higher equity markets, which were only partly offset by adverse claims experience in the Americas, adverse currency movements and reclassifying the result of Central & Eastern Europe from operating result to Other income following the announced divestment of the business. Adjusted for this reclassification and on a constant currency basis, Aegon’s operating result increased by 32% compared with the first quarter of 2020.

The operating result from the Americas increased by 27%, or 38% on a constant currency basis, compared with the first quarter of 2020 to EUR 163 million. The main drivers were favorable equity market performance – especially in Variable Annuities and Retirement Plans – and lower addressable expenses in all lines of business. In addition, better than expected morbidity experience, mainly in Long-Term Care, contributed EUR 65 million. This was offset by EUR 138 million adverse mortality experience in Life, which was EUR 81 million worse than the first quarter in 2020. Aegon estimates that EUR 79 million of claims in the first quarter of 2021 can be directly attributed to COVID-19 as the cause of death. Aegon believes that the remaining adverse mortality experience is, to a large extent, attributable to the pandemic as well.

Aegon’s operating result in the Netherlands increased by 19% compared with the first quarter of 2020 to EUR 184 million. This was driven by higher investment margins in the Life business, growth in Mortgages and better claims experience in Workplace Solutions.

The operating result from the United Kingdom decreased by 11% compared with the first quarter of 2020 to EUR 39 million, driven by lower results from Aegon’s protection and distribution businesses. Fee revenues were broadly stable, as the favorable impact from higher equity markets was offset by net outflows in recent quarters.

The operating result from International decreased by 42% to EUR 28 million in the first quarter of 2021, reflecting the reclassification of the result of Central & Eastern Europe from operating result to Other income following the announced divestment of the business. Adjusting for this impact, the operating result decreased by 6% on a constant currency basis, as business growth and improved claims experience in Spain & Portugal and China were more than offset by a lower result in TLB and in the Asian direct marketing business.

The operating result from Aegon Asset Management nearly doubled compared with the first quarter of 2020 to EUR 75 million. The increase was mostly driven by strong performance of Aegon’s Chinese asset management joint venture, Aegon Industrial Fund Management Company (AIFMC). The operating result from Global Platforms also increased, mainly due to higher revenues as a result of net deposits and favorable market movements.

The operating result from the Holding amounted to a loss of EUR 59 million, mainly driven by funding expenses.

Non-operating items

The result from non-operating items amounted to EUR 50 million in the first quarter of 2021, resulting from realized gains and net recoveries on investments.

Fair value items

The gain from fair value items amounted to EUR 3 million in the first quarter of 2021. Losses on hedge programs, a result of higher equity markets and interest rates, were offset by a reduction in the Liability Adequacy Test deficit in the Netherlands. The latter was mostly driven by market movements, including mortgage spread tightening.

Realized gains on investments

Realized gains on investments amounted to EUR 31 million driven by normal trading activity.

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Net recoveries

Net recoveries amounted to EUR 16 million, as recoveries on investments – including the unsecured loan portfolio in the Netherlands and corporate credits in the Americas – more than offset gross impairments.

Other income

Other income amounted to EUR 1 million, which included the favorable impact from an update of inflation assumptions in the Netherlands and a one-time gain in the Americas related to the sale of a small-sized Individual Retirement Account (IRA) portfolio to a third party. These offset EUR 83 million of one-time investments related to the operational improvement plan and EUR 15 million IFRS 9 / 17 project costs in the Holding.

Net result

The income tax expense amounted to EUR 96 million, while the profit before tax was EUR 482 million, resulting in a net result of EUR 386 million. The effective tax rate of 20% is below the nominal tax rate, which is mainly due to tax-exempt income and tax credits in the Americas.

Expenses

Addressable expenses decreased by 12% compared with the first quarter of 2020, or 8% on a constant currency basis, to EUR 691 million. This was driven mainly by expense initiatives as part of the operational improvement plan. Furthermore, expenses benefited from lower travel, marketing, and sales activities due to the impact of the COVID-19 pandemic. Addressable expenses in both the first quarter of 2020 and 2021 exclude expenses related to Central & Eastern Europe following the announced divestment of the business.

Operating expenses decreased by 4% compared with the first quarter of 2020 to EUR 954 million. The decline in addressable expenses, and lower IFRS 9 / 17 project costs were partly offset by EUR 83 million one-time investments related to the operational improvement plan.

Sales

Net deposits for the Group amounted to EUR 0.4 billion in the first quarter of 2021. This was the result of EUR 3.1 billion third-party net deposits in Asset Management, mainly from AIFMC. Furthermore, the United Kingdom contributed EUR 0.7 billion net deposits driven by the platform business, and the Netherlands contributed EUR 0.2 billion as a result of continued demand for defined contribution products (PPI). These were partly offset by EUR 3.6 billion net outflows in the Americas, which were mainly attributable to outflows in the large market segment of Retirement Plans.

New life sales declined by 13% compared with the first quarter of 2020 to EUR 181 million. This was mainly driven by derecognition of Central & Eastern Europe new life sales following the announced divestment of the business. Adjusting for this impact, new life sales were up 2% on a constant currency basis compared with the first quarter of 2020. This was mostly driven by higher sales in the Americas, where Indexed Universal Life sales benefited from an 18% increase in licensed agents at World Financial Group (WFG), in addition to a higher market share in this affiliate distribution channel. This was partly offset by lower sales in the Netherlands following the decision to classify the Dutch Life business as a Financial Asset and, over time close most products for new sales. Furthermore, new life sales in China were down, as a result of a decline in low-margin single premium sales through the bank channel.

New premium production for accident & health insurance decreased by 25% to EUR 55 million. This was mainly due to last year’s decision to exit the individual Medicare supplement segment in the Americas and lower market-wide demand for group disability products in the Netherlands.

New premium production for property & casualty decreased by 30% compared with the first quarter of 2020 to EUR 25 million. This was mainly driven by derecognition of Central & Eastern Europe production following the announced divestment of the business. Adjusting for this impact, sales increased by 47%, mainly as a result of higher sales in Spain & Portugal driven by the introduction of a new household insurance product.

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Market consistent value of new business

Market consistent value of new business (MCVNB) increased by 67% compared with the first quarter of 2020 to EUR 166 million. This was mainly driven by an increase in MCVNB in the Americas resulting from the repricing of variable annuity riders, as well as higher volumes and a favorable product mix in Indexed Universal Life.

Shareholders’ equity

Shareholders’ equity excluding revaluation reserves increased by EUR 1.2 billion during the first quarter of 2021, to EUR 16.7 billion – or EUR 8.03 per common share – on March 31, 2021. The increase was mainly driven by retained earnings and favorable currency movements.

Gross financial leverage

Gross financial leverage increased by EUR 0.1 billion in the first quarter of 2021, leading to gross financial leverage of EUR 6.1 billion per March 31, 2021. This increase was driven by the strengthening of the US dollar against the Euro.

The gross financial leverage ratio improved from 27.9% on December 31, 2020, to 26.7% on March 31, 2021, as the increase in leverage was more than offset by higher shareholders’ equity excluding revaluation reserves.

Cash Capital at Holding and Free Cash Flow

Aegon’s Cash Capital at Holding position increased from EUR 1,149 million to EUR 1,191 million during the first quarter of 2021, which is in the upper half of the operating range of EUR 0.5 billion to EUR 1.5 billion. Free cash flow to the Holding of EUR 75 million resulted from EUR 115 million gross remittances from the units and EUR 41 million holding funding and operating expenses. Additional proceeds of EUR 21 million from the divestment of Stonebridge were received by the Holding in the first quarter. These cash inflows were partly offset by EUR 54 million capital injections and other items, mainly to fund one-time investments related to the operational improvement plan.

Capital ratios

Aegon’s Group Solvency II ratio decreased from 196% to 194% during the first quarter of 2021, and the capital ratios of its three main units were around or above their respective operating levels at the end of the quarter. Capital generation after holding expenses amounted to EUR (28) million for the first quarter of 2021. Market movements totaled EUR (358) million and were mainly driven by the impact of interest movements in the Netherlands. One-time items amounted to EUR 107 million, as management actions in the United Kingdom as well as several other smaller items across the Group more than offset the impact of the reduction of the ultimate forward rate by 15 basis points in the Netherlands. Operating capital generation amounted to EUR 223 million, despite being impacted by adverse mortality due to the COVID-19 pandemic.

The estimated RBC ratio in the United States decreased from 432% on December 31, 2020, to 428% on March 31, 2021, and remained above the operating level of 400%. Market movements had a slight negative impact on the RBC ratio, as higher equity markets and significantly higher interest rates led to flooring of variable annuity reserves. In addition, dividend payments to the intermediate holding company reduced the RBC ratio by 8 percentage points. Operating capital generation had a positive impact, despite being impacted by adverse mortality as a result of the COVID-19 pandemic.

The estimated Solvency II ratio of NL Life decreased from 159% on December 31, 2020, to 149% on March 31, 2021, which is around the operating level of 150%. The decline resulted from the reduction of the ultimate forward rate by 15 basis points and the adverse impact from market movements on the ratio, which was driven by rising interest rates. This is a reflection of the fact that Aegon hedges on an economic basis. Real estate revaluations also had a negative impact on the ratio following a change in transfer tax. There was a partial offset from the tightening of mortgage spreads. Operating capital generation had a positive impact, which offset the EUR 25 million dividend payment to Group in the first quarter.

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The estimated Solvency II ratio for Scottish Equitable Plc increased from 156% on December 31, 2020, to 158% on March 31, 2021, and remained above the operating level of 150%. The increase was primarily driven by management actions to reduce the equity risk in the own pension scheme and the interest rate risk in the general account. In addition, operating capital generation had a positive impact. These positive impacts more than offset the impact of dividend payments to the intermediate holding company.

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Operating result

The operating result from the Americas increased by USD 54 million compared with the first quarter of 2020 to USD 196 million. The main drivers were favorable equity market performance – especially in Variable Annuities and Retirement Plans – and lower addressable expenses in all lines of business. In addition, better than expected morbidity experience, mainly in Long-Term Care, contributed USD 78 million. This was offset by USD 166 million adverse mortality experience in Life across Individual and Workplace Solutions compared with USD 68 million in the first quarter last year. Aegon estimates that USD 95 million of claims in the first quarter of 2021 can be directly attributed to COVID-19 as the cause of death. Aegon believes that the remaining adverse mortality experience is, to a large extent, attributable to the pandemic as well.

Net result

The net result in the Americas increased from a loss of USD 542 million in the first quarter of 2020 to a profit of USD 149 million in the first quarter of 2021. The increase was driven by improvements in the result from non-operating items, lower Other charges, as well as a higher operating result.

Non-operating items resulted in a loss of USD 30 million compared with USD 741 million loss in the first quarter of 2020. The loss from fair value items of USD 63 million in the first quarter of 2021 was driven mainly by a loss of USD 111 million from the macro hedge programs. This included the adverse impact from underperformance of underlying funds, while the macro equity hedge and the recently implemented macro interest rate hedge performed in line with expectations. The gain from fair value hedges with an accounting match amounted to USD 25 million. The dynamic hedge program on GMWB variable annuities was 98% effective resulting in a small loss. This was more than offset by a gain from unhedged risks and a favorable hedge result from other lines of business. Fair value investments resulted in a gain of USD 37 million mainly from increased private equity investment valuations.

Realized gains on investments came in at USD 26 million, as normal trading activity in a low interest rate environment resulted in gains on bonds. Gross impairments of USD 4 million were more than offset by recoveries of corporate credits following successful restructuring processes, resulting in net recoveries of USD 7 million.

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Other charges of USD 8 million were largely driven by USD 35 million of restructuring expenses and one-time investments related to the operational improvement plan, which were offset by other items netting to a gain of USD 27 million, mainly from the sale of a small-sized Individual Retirement Account (IRA) portfolio to a third party.

Income taxes in the first quarter of 2021 amounted to USD 9 million, leading to a 6% effective tax rate. This is below the statutory rate of 21% due to tax exempt income and tax credits.

Expenses

Addressable expenses decreased by USD 62 million to USD 358 million in the first quarter of 2021. This decrease was driven by lower employee headcount and tighter expense management for third-party spend, as a result of expense savings initiatives. In addition, expenses benefited from reduced incentive compensation and COVID-19 pandemic induced lower expenses for travel, marketing, and sales activities.

Operating expenses decreased by 11% to USD 427 million, mainly caused by the decrease in addressable expenses. This was partly offset by higher restructuring expenses and one-time investments of USD 35 million related to the operational improvement plan, compared with USD 17 million of restructuring charges in the first quarter of the prior year.

Sales

Total net outflows increased to USD 4.3 billion in the first quarter of 2021 compared with USD 1.7 billion in the first quarter of last year. This was split between USD 3.1 billion net outflows in Workplace Solutions and USD 1.2 billion outflows in Individual Solutions.

The increased outflows in Workplace Solutions were largely attributable to USD 3.6 billion outflows in the large market segment of Retirement Plans in the first quarter of 2021. In the Middle-Market segment of Retirement Plans, where Transamerica aims to compete as a top-5 player, net deposits improved from USD 0.1 billion outflows in the first quarter of 2020, to USD 0.2 billion net deposits in the first quarter of 2021. In addition, retention efforts have led to roll-overs into IRAs resulting in USD 0.3 billion net deposits.

Net outflows in Individual Solutions improved from USD 1.6 billion outflows in the first quarter of 2020 to USD 1.2 billion outflows in the same period of this year. Outflows were mainly driven by higher net outflows in Variable Annuities, which were caused by both an increase of surrenders in part of the book, and by the repricing of products with interest rate sensitive living and death benefit riders. These were partly offset by the fourth consecutive quarter of positive net deposits in Mutual Funds, while in the first quarter of 2020, Mutual Funds saw net outflows caused by market volatility surrounding the COVID-19 pandemic.

New life sales were up by 21% to USD 118 million from USD 97 million in the first quarter of 2020. The Individual Solutions business generated new life sales of USD 83 million for the first quarter of 2021, a 27% increase compared with the same period last year. Individual Solutions increased its market-share at World Financial Group (WFG) and benefited from 18% growth of WFG’s licensed agent salesforce. The growth in market share is supported by a new funeral planning benefit for policyholders. Furthermore, new life sales increased in Workplace Solutions by 3% to USD 18 million and in Brazil by 18% to USD 16 million.

New premium production for accident & health insurance decreased by USD 9 million to USD 50 million, mainly due to last year’s decision to exit individual Medicare supplement. This was partly compensated by a 5% increase in Workplace Solutions sales to USD 47 million, which was mainly driven by growth in supplemental health products.

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Market consistent value of new business

Market consistent value of new business increased from USD 39 million in the first quarter 2020 to USD 120 million in the first quarter of 2021. Improved value of new business in Individual Solutions was mainly driven by repricing of variable annuity riders, and by higher volumes, lower underwriting expenses, and a favorable product mix in Indexed Universal Life. Moreover, Workplace Solutions’ value of new business improved, mainly from a more favorable product mix in Retirement Plans.

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