Aegon UK Strategy Update London, September 2 nd 2014 Adrian Grace - PowerPoint PPT Presentation

Aegon UK Strategy Update London, September 2 nd 2014 Adrian Grace Clare Bousfield Management Board Member UK Chief Financial Officer & UK Chief Executive Officer

Overview Agenda Key Messages Our clear strategy has not changed, with our customer-focused platform Strategy making the most of the market opportunities Regulatory Change The Government and the DWP’s announcements will have a significant effect & Our Advantage on the industry. These changes support our strategy giving us an advantage We are delivering on our strategy through proposition development and distribution, Delivery backed up by delivering on our financial targets We will continue to deliver on our plans, leading to growing earnings, ROC Targets and cashflow which will produce dividends We have a strong strategy which is able to make the most of the regulatory Conclusions change, we will continue to deliver on our plans 2

Aegon UK at a glance 6 locations OPERATING STRUCTURE EDINBURGH Aegon UK Board LYTHAM MANCHESTER DUBLIN LONDON Aegon UK Executive MAIDENHEAD Aegon UK Distribution Channels Aegon Ireland At Non- Workplace Retirement advised ADMS 2 million Origen CUSTOMERS  Support Services Marketing Customer Services £58bn Finance Risk Legal HR +2,000 FUNDS UNDER EMPLOYEES MANAGEMENT 3

Component parts of the Aegon UK business Core Distribution Channels: At Retirement, Workplace & Non-advised With-Profits Pensions Annuities Current AUM c£6.1bn Closed fund with extensive (Central to strategy) Currently c£9bn portfolio guarantees Current AUM c£41bn Protection Legacy Products Focus on internal Annual premiums £250m on Systems vesting annuities Growth plans & Clear Strategy Distribution Origen Strategic Delivery Generates Earnings and Platform Aegon Ireland Products Capital Intensive Inc Variable Annuity Sold through the UK 4

Regulatory, Government and Market changes have challenged our strategy but it remains fundamentally strong Significant Change Challenges Outcomes Capital  Extensive challenges Regulators Solvency II  to existing models Pricing approach  Improving customer UK Government outcomes Price Cap  Remove  Investing in commission Distribution Remove AMD* enabling solutions  Retirement flexibility  Guidance guarantee  Short term financial IGCs**  Business Models challenges Collective pensions  Non-advised Persistency risk  Pricing customers increase Cost base  Speed of execution Agile proposition  Strategy Execution & preparedness Execution roadmap  Business Transformation *AMD = Active Member Discount ** IGC = Independent Governance Committee 5

Our strategy is to use our platform to acquire, retain and consolidate the retirement assets of our target customers across a very large market Non-Advised At Retirement Workplace Regulation creating Government requiring Ageing population with under-served population employees to be auto- accumulated assets of existing customers enrolled £820bn individual retirement 840k existing customers £1.2trn pension assets    assets £18bn of existing FUM  6-9 million new savers  Access to Access to Under-consolidated potential £2bn of collective under auto-enrolment  valuable valuable of £100bn investments per annum customers customers £2.6bn net revenue from  33% of Retail attrition  AUK has less than 1% share DC pension by 2022  Less pressure on charges  of assets on platform Proposition launched November 2011 Proposition launched March 2014 Proposition launched June 2012 Clear customer Compelling customer Award winning Focused & promise solutions platform consistent strategy Simple Rewarding Reassuring To grow assets & margin 6 6

A wide range of experience to drive our progress Duncan Jarrett David Beattie Angela Seymour Jackson MD Retail MD Direct MD Workplace 1986 2008 2012 David Macmillan Tommy Young CMO COO 2009 2011 Jim Ewing Neil Machray Clare Bousfield CRO Internal Audit CFO 2013 2011 2010 Date joined Aegon 7 

We understand customer value and our battleground – we are focused on retaining and growing our share of the critical age 50+ market Customer Acquisition Most Valuable Customers (£150 income / customer) (£315 income / customer) 8

Retaining, Upgrading and Consolidating our existing valuable customers is key to our future growth… c80% of the UK’s wealth is held by people over the age of 50 * We have the customers • Optimising value by focussing on today… persistency drivers Retain Integrated solution for  • Developing capability for Orphan Workplace, Advisers and • 65% of our customers customers for non-advised Direct to Customer solutions are between the ages of 40 - 64 (£30bn AUM)  A focussed strategy to • ‘Look through’ capability to a optimise value Digitise/ digital customer experience • Average AUM for this Upgrade • Developing digital relationships segment is £32k for  Current total unconsolidated to encourage engagement Packaged and £56k for assets amount to £100bn Platform • Targeting our valuable Digital platform capability to  customers to bring their ‘pots’ • Unconsolidated provide a ‘full view’ of together Consolidate customers assets retirement assets for this • Building a ‘Consolidation’ segment is estimated at service, capability and customer £83bn ** journey – make it easy to do business Clear accountabilities and responsibilities for value management across the business will that drive consolidation opportunities Source - *CII **Outside Aegon 9

Offering a “to and through” retirement solution on a single platform that uniquely supports seamless customer transition across channels At Retirement Non-Advised Workplace Accumulation Access to Access to valuable valuable customers customers Launched November 2011 Launched March 2014 Launched June 2012 Single Investment & Trading Platform Advice/Government Generic Government Guidance Support Customer selects Individual Guidance approach depending on needs GUIDANCE SOLUTIONS ADVICE SOLUTIONS Digital information & Coach & guided Tax & Complex income & support solutions via web Inheritance planning portfolio solutions Decumulation Focused investment solutions Wide range of investment options Simplified Sophisticated Building on Simplified Annuity Pension Annuity Income Income existing Guarantees portal Guarantees portal Drawdown Drawdown capability NEW IN NEW IN 2015 2015 10

Retiready demo https://www.youtube.com/watch?v=VBeZqKJlbho Aegon Retiready Service Flythru 11

Competitive strengths under-pin our customer strategy and offer Award winning,, Brand new Income market leading* mobile-first Drawdown is a Single technology State of art ‘to and through’ Integrated technology rolled standard feature platform technology retirement solution out for on our platform. supporting a enabling straight platform designed regardless of ‘Retiready’ our Pension multi-channel through for both the advice preference first non-advised Guarantees to be proposition processing Platform individual and customer integrated in corporate markets proposition early 2015 Pension assets Established 1.2m existing Opportunity to represent c30% of strong scale customers are grow is Cost synergies as a customers share presence in the 600k customers ready to upgrade significant - we transition to of wallet. c70% of Workplace and aged 50+ Leveraging to the new Aegon UK 5% Platform model assets are Intermediary platform market share Existing available to target markets Assets Able to adapt Established track quickly to Simplified Innovations in Established record for market, operating model price, management delivery and government and (2 core investments and team speed of regulator platforms) brand awareness Delivery execution challenges Capability *Source - Platforum 12

Platform growth driven by retaining and acquiring the right customers The Platform attracts and retains Fast growing platform valuable customers £1.9bn Award Workplace Attract 70% of platform customers are new to Aegon winning One Retirement platform ARC Upgrade & Upgrade New Packaged consolidate only individuals Comparison Retain & Avg. Consolidate 1 AUM £k 125 85 55 20 Leading to income £ p.a. per Jan 2013 Jun 2014 growth 510 380 230 290 cust.  Fastest growing platform in the market in Q4 2013 (Platforum)  Awarded major industry award Best Workplace platform 15% General (Platforum) for second year running 73% Investment Acc. Diversify pension  Awarded Best New Platform and Best Use of Platform 12% ISA Technology (Aberdeen Platform Awards)  More than 1,400 advisers using the platform 13 Note 1: excludes Workplace