First quarter 2011 re quarter 2011 r esults sults and Embedded Valu and Embedded Val ue 2010 e 2010 Jan Nooitgedagt Jan Nooitgedagt CFO Analyst & investor presentation The Hague, May 12, 2011
Key messages � Solid progress on strategic objective Solid progress on strategic objectives s � Underlying earnings impacted by exce Underlying earnings impacted by ex ceptional charges and longevity provisioning ptional charges and longevity provisioning � Continued focus on cost control � Strong earnings and sales of pension Strong earnings and sales of pensions s and variable annuities in the US and variable annuities in the US � Strong excess capital of EUR 3.7 billi Strong excess capital of EUR 3.7 billio on n � Total embedded value increases to EU Total embedded value increases to E UR 18.9 billion R 18.9 billion 2 2
Continued focus on execution of strat Continued focus on execution of strate egy in Q1 gy in Q1 � Divestment Tran Divestment Tra nsamerica Reinsurance for total after-tax consideration of samerica Reinsurance for total after Reallocate capital USD 1.4 billion � Increased fee Increased fee b business, reduced spread business in the US usiness, reduced spread business in the US Strong earni Strong earn ings and sales of US pensions and variable annuities ngs and sales of US pensions and variable annuities ► � Successful refo Successful ref ocus on life business in the CEE cus on life business in the CEE Increase returns � Operating exp Operating expe enses decreased by 1%* nses decreased by 1%* � Equity exposure Equity exposur e US GMIB back-book fully hedged US GMIB back � Reorganization Reorganization AEGON Bank NL, cost savings EUR 20 million p.a. AEGON Bank NL, cost savings EUR 20 million p.a. � New CEO AEG AE GON UK; restructuring on track ON UK Aim to fully repurchase core capital se securities from Dutch State by end of June curities * Operating expenses at constant currencies and exclu * Operating expenses at constant currencies and excl uding restructuring charges ding restructuring charges 3
Key benefits of Transamerica Reinsur Key benefits of Transamerica Reinsura ance divestment nce divestment � Divestment of non-core life reinsurance activities D ivestment of non � S Supports repurchase of remaining core capital securities upports repurchase of remaining core capital securities 1 Execution of AEGON’s strategy � R Retained blocks of business put in run-off etained blocks of business put in run � Reduction of capital employed in the US R eduction of capital employed in the US � C Cash proceeds of USD 0.9 billion; capital release of USD 0.5 billion ash proceeds of USD 0.9 billion; capital release of USD 0.5 billion � 2 Strengthening cash and capital position Upstream USD 1.1 billion to the holding U pstream USD 1.1 billion to the holding � N No meaningful impact on shareholders’ equity o meaningful impact on shareholders’ equity � T Transaction consists of a number of reinsurance agreements ransaction consists of a number of reinsurance agreements � 3 Structure of the deal Sale of Transamerica International Reinsurance Ireland S ale of Transamerica International Reinsurance Ireland � Administrative service agreement for business reinsured A dministrative service agreement for business reinsured � 4 Improving AEGON’s risk profile Reinsurance reserve collateral requirements reduced by ~50% R einsurance reserve collateral requirements reduced by ~50% 4
Results highlighted Underlying earnings before tax Operational free cash flows (EUR million) EUR million Q1 2011 � Earnings on in force 523 � Return on free surplus 17 � 483 446 452 452 Release of required surplus (1) 414 � New business strain (275) � Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Operational free cash flow 264 Return on Equity Strategic shift from spread to fee (%) (USD billion) 141 9.3 133 8.9 8.7 8.5 7.8 124 54 118 52 51 114 49 47 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 US spread balances ■ US fee balances ■ Note: Life reinsurance and BOLI/COLI are included in Life reinsurance and BOLI/COLI are included in run-off businesses and are no longer reported in UEbT, sales and deposits run 5
Underlying earnings impacted by UK c Underlying earnings impacted by UK charges and NL longevity provisioning harges and NL longevity provisioning � Americas’ earnings up 2% driven by stron Americas’ earnings up 2% driven by strong g pensions and variable annuities pensions and variable annuities As of Q1 BOLI/COLI and life reinsurance r As of Q1 BOLI/COLI and life reinsurance re eported in run-off businesses ported in run ► � Earnings in the Netherlands lower due to Earnings in the Netherlands lower due to h higher provisioning for longevity of EUR 24 million igher provisioning for longevity of EUR 24 million � UK impacted by exceptional charges of GB UK impacted by exceptional charges of G BP 21 million, mainly related to customer redress P 21 million, mainly related to customer redress � New markets up on VA Europe and asset m New markets up on VA Europe and asset management, partly offset by investments in Asia anagement, partly offset by investments in Asia Underlying earnings in the CEE were stable Underlying earnings in the CEE were stabl e, despite impact from new pension legislation in Hungary , despite impact from new pension legislation in Hungary ► Americas The Netherlands United Kingdom New Markets (USD million) (EUR million) (GBP million) (EUR million) 25 494 474 465 104 59 57 10 87 81 46 -6 Q1 10 Q4 10 Q1 11 Q1 10 Q4 10 Q1 11 Q1 10 Q4 10 Q1 11 Q1 10 Q4 10 Q1 11 6
Higher provisioning for longevity in th Higher provisioning for longevity in the e Netherlands � New projected mortality tables (2010 – 206 20 60) showed a strong increase in life expectancy 0) One-off impact on excess capital of EUR 22 off impact on excess capital of EUR 2 25 million in Q4 2010 5 million in Q4 2010 ► � Provisioning based on actual/observed mo m ortality is taken through underlying earnings rtality is taken through underlying earnings in line with AEGON’s accounting methodology in line with AEGON’s accounting methodol in line with AEGON’s accounting methodo in line with AEGON’s accounting methodology logy ogy CBS* 2005-2010 observed mortality tables 2010 observed mortality tables only available in 2012 only available in 2012 ► AEGON assumes for 2005-2010 observed m 2010 observed mortality a continuation of the emerging trend of strong ortality a continuation of the emerging trend of strong ► improvements in observed mortality for 201 improvements in observed mortality for 20 10 0 Longevity provisioning is increased by Longevity provisioning is increased b y EUR 20 million on average per quarter for 2011 EUR 20 million on average per quarter for 2011 ► * Centraal Bureau voor de Statistiek / Central Bureau o Centraal Bureau voor de Statistiek / Central Bureau of Statistics f 7
Continued focus on cost control � Operating expenses up 3% due to restruct Operating expenses up 3% due to restruc turing charges and currency movements uring charges and currency movements down by 1% excluding restructuring charge down by 1% excluding restructuring charges s and at constant currencies and at constant currencies ► � Americas: declined 2% as a result of cont Americas: declined 2% as a result of conti i nued cost reduction initiatives nued cost reduction initiatives � The Netherlands: higher on investments in The Netherlands: higher on investments i n new distribution capabilities new distribution capabilities � UK: cost savings offset by charges related UK: cost savings offset by charges relate d to customer redress and restructuring to customer redress and restructuring on track to reduce costs by 25% by the en on track to reduce costs by 25% by the end d of 2011 of 2011 ► � � New markets: operating expenses increa New markets: o eratin New markets: operating expenses increas New markets: operating expenses increased on restructurin p g ex enses increased on restructuring charges in asset management p sed on restructuring charges in asset management ed on restructuring charges in asset management g char es in asset mana ement g g Operating expenses Americas The Netherlands United Kingdom New Markets (USD million) (EUR million) (GBP million) (EUR million) 205 168 514 501 492 98 98 95 189 141 182 133 Q1 10 Q4 10 Q1 11 Q1 10 Q4 10 Q1 11 Q1 10 Q4 10 Q1 11 Q1 10 Q4 10 Q1 11 8
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