Fourth quarter 2011 results Fourth quarter 2011 results Alex - PowerPoint PPT Presentation

Fourth quarter 2011 results Fourth quarter 2011 results Alex Wynaendts CEO Media Conference Call Media Conference Call The Hague – February 17, 2012

Continued strong capital position and resilient franchise ƒ 2011, a year of transformation; positioning for the future ƒ Underlying earnings affected by UK exceptional charges and expenses ƒ Restructuring in the UK finalized; in the Netherlands on track ƒ ƒ Sales demonstrate strength of franchise Sales demonstrate strength of franchise ƒ Capital position remains strong ƒ Proposed final dividend over H2 2011 of EUR 0.10 per common share 2 2

Positioning for the future 2011, a year of transformation Capturing opportunities F ll Full repayment Dutch government t D t h t UK retirement platform launched; workplace UK ti t l tf l h d k l ► ► savings platform to be launched in H2 2012 Restructuring process in the UK finalized ► zyxwvutsrqponmlkihgfedcbaYWVUTSRQPONMLKIHGFEDCBA Innovative longevity transactions and Premie Restructuring on track in the Netherlands ► ► Pensioeninstelling introduced in the Netherlands g Divestment of Guardian and ► New online banking proposition to be launched Transamerica Reinsurance ► in the Netherlands in Q2 2012 BOLI/COLI business in run-off ► New US VA partnerships added ► Withdrawing sales & marketing support Withdrawing sales & marketing support ► iTouch pension plan enrollment in the US for investment products in Canada ► US voluntary benefit healthcare product Fixed annuity and institutional spread ► ► developed, benefiting from new legislation based balances reduced by USD 10 y billion; in line with strategy 3

Focus on delivering on targets Achieve return on equity of Grow underlying earnings Double fee-based earnings to Increase annual normalized before tax by operational free cash flow to €1.3-1.6 30-35% 10-12% 7-10% billion on average per annum g p by 2015 y of underlying earnings by 2015 by 2015 between 2010 and 2015 Return on equity Underlying earnings Fee-based earnings Normalized operational free before tax cash flow €1.2 6.7% -17% 30% (7.9% excluding ( g billion* billion* run-off capital) FY 2011 of underlying earnings FY 2011 FY 2011 FY 2011 * Normalized for market impact of EUR 1.1 billion in Q3 2011 4 See slide 25 for main economic assumptions embedded in targets

Underlying earnings reflect a year of transition ƒ US variable annuities higher as a result of higher balances and one-time benefit of EUR 23 million related to assumption update for revenue sharing with third-party fund managers ƒ Life & Protection impacted by a charge of EUR 22 million related to Long Term Care, Q4 2010 p y g g , Q included a benefit of EUR 14 million ƒ Results in the Netherlands were impacted by higher expenses related to the execution of a zyxwvutsrqponmlkihgfedcbaYWVUTSRQPONMLKIHGFEDCBA p program for product improvements and investments in a new online banking proposition g p p g p p UK earnings were down on exceptional charges and expenses ƒ Underlying earnings before tax (EUR million) (EUR million) 452 39 (17) (53) (13) (40) (22) 346 Underlying US variable US fixed Life & Protection NL product UK exceptional Other Underlying earnings earnings annuities annuities annuities de annuities de- Americas Americas improvements improvements items items earnings earnings Q4 2010 emphasized and new Q4 2011 proposition 5

Underlying earnings up sequentially in all markets except for the UK ƒ Compared to Q3, Americas' results increased driven by strong US variable annuities and zyxwvutsrqponmlkihgfedcbaYWVUTSRQPONMLKIHGFEDCBA pension earnings partly offset by higher provisioning for Long Term Care ƒ Results in the Netherlands up on higher pension results due to favorable mortality and morbidity p g p y y ƒ New Markets were higher following improved non-life results in Hungary ƒ UK results were impacted by charges and expenses related to customer redress program ƒ Return on equity 6.7% YTD, or 7.9% excluding run-off businesses R t it 6 7% YTD 7 9% l di ff b i Underlying earnings before tax Underlying earnings before tax (EUR million) 361 18 7 10 (35) (15) 346 Underlying Underlying Americas Americas The Netherlands The Netherlands New Markets New Markets United Kingdom United Kingdom Holding Holding Underlying Underlying earnings Q3 2011 earnings Q4 2011 6

Net income mainly affected by one-time charges ƒ F i Fair value items show the negative result of the macro hedge in the Americas offset by positive l it h th ti lt f th h d i th A i ff t b iti zyxwvutsrqponmlkihgfedcbaYWVUTSRQPONMLKIHGFEDCBA fair value movements in the Netherlands ƒ Impairments were mainly linked to US RMBS and mortgages in Hungary. Continuing downward trend in impairments Continuing downward trend in impairments ƒ Other charges mainly reflect a write-off of intangibles related to the distribution business in the Netherlands and restructuring charges in the Netherlands and UK ƒ Income tax reflect the utilization of losses in US for which no deferred tax asset was recognized Income tax reflect the utilization of losses in US for which no deferred tax asset was recognized Underlying earnings to net income development in Q4 2011 (EUR million) 346 (20) 49 (94) (194) 1 (7) 81 ƒ US death master file EUR 37m ƒ NL intangibles impairment EUR 75m, restructuring EUR 12m ƒ UK restructuring EUR 48m ƒ Holding restructuring and other EUR 18m Underlying Fair value items Realized gains Impairment Other charges Run-off Income tax Net income earnings before on investments charges businesses Q4 2011 tax Q4 2011 7

Cost savings offset by restructuring charges ƒ Achieved cost savings in Americas, Netherlands and UK in line with plans and strategic focus Investments in new propositions such as new distribution initiatives in the Netherlands and new ƒ pension platform in the UK ƒ 2011 contains one-time net benefit related to employee pension plan changes ƒ Restructuring charges related mainly to programs in the Netherlands and UK Operating expenses (EUR million) 3,397 (94) (90) 44 3,257 (31) 180 36 3,442 zyxwvutsrponmlkihgfedcbaVUTSRQPONMLIGFEDCBA 2010 Currency effects Cost savings Development new Operating Employee benefit Restructuring Other* 2011 established propositions expenses excl. plans charges markets restructuring and other * Other includes exceptional expenses related to the divestment of Transamerica Reinsurance and the sale of Guardian 8

UK restructuring plan delivered ƒ 25% cost reduction enacted in 2011 Operating expenses ƒ Final phase of customer redress program, (GBP million) Q4 earnings impacted by: Q g p y Charges of GBP 52 million ► Program expenses of GBP 19 million -25% ► ƒ ƒ Focus on At Retirement and Workplace savings: Focus on At Retirement and Workplace savings: At Retirement Platform launched ► ■ New initiatives Offering range of products ■ Distribution ► ■ Life & Pensions Giving access to (AEGON) investment products Giving access to (AEGON) investment products ► ► Phased roll out 320 240 ► Workplace savings platform focused on employers ► 2009 2012 and their employees to be launched in H2 2012 target ƒ Well-positioned for future growth p g 9

Restructuring Dutch organization while investing in new initiatives ƒ Cost reduction of EUR 100 million from 2010 level Operating expenses ƒ Majority of savings to be achieved in 2012 (EUR million) Restructuring on track Restructuring on track ► ► 2011 cost saves of EUR 35 million ► -100 Reduction of 200 positions per year-end 2011 ► ƒ New initiatives New distribution proposition to be launched in Q2 2012 ► Introduction of Premie Pensioeninstelling (PPI) product ► 498 454 ~400 Innovative longevity transaction to partially offset ► the risk of future longevity increases 2010 2011 2013 ƒ ƒ Life & Savings, Pensions, Non-life Life & Savings Pensions Non life ƒ Restructuring charges ƒ Repositioning for changing conditions and opportunities p g g g pp 10

AEGON leading in Dutch pension market ƒ AEGON expands pension de-risking capabilities and completes innovative longevity transactions in the Netherlands AEGON partially offsets the risk of future longevity increases related to EUR 12 billion of reserves ► • The first transaction in Continental Europe to be based on population data • The first longevity swap to be targeted directly to capital markets ƒ Dutch pension sales in 201 Dutch pension sales in 2011 increased 5% to EUR 173 million compared with 2010 1 increased 5% to EUR 173 million compared with 2010 Several large contracts closed, demonstrating AEGON’s capabilities and capacity in the pension ► market ƒ New opportunity in Dutch pension market: Premie Pensioeninstelling (PPI) Approval from Dutch Central Bank (DNB) to set up PPI ► Low-cost carrier for individual retirement savings account; access to AEGON investment funds ► PPI will provide DC pension solution to larger corporations that highly value quality PPI will provide DC pension solution to larger corporations that highly value quality ► 11