AEGON N.V. - 1st Quarter Results
May 14, 2009 (PR Newswire Europe via COMTEX) --
Company: Aegon N.V. (AEG)
Q1 2009 results release May 14, 2009
AEGON significantly improves earnings in first quarter of 2009
- Underlying loss before tax of EUR 22 million due primarily to lower equity
markets
- Impairments of EUR 386 million contribute to net loss of EUR 173 million
- New life sales of EUR 543 million; total gross deposits of EUR 8.2 billion;
net deposits of EUR 1.1 billion, excluding institutional guaranteed products
- Value of new business of EUR 201 million
- Excess capital over AA capital adequacy requirements of EUR 2.7 billion
- IGDa) solvency ratio of approximately 170%
- Core capitalb) of EUR 16.4 billion, excluding revaluation reserve at the end
of Q1 2009 (EUR 7.9 billion including revaluation reserve)
Statement Alex Wynaendts, CEO
"Despite the persistent challenges of the financial crisis, AEGON
significantly improved earnings compared to the second half of 2008. Although
we posted a net loss in the first quarter, we are encouraged by the
improvement in earnings and the indications that the fundamentals of our
business remain sound.
"We continue to focus on freeing up capital from our businesses, reducing
costs, and taking measures to counter the effects of the current environment.
Consequently, we released an additional EUR 900 million of capital during the
first quarter, and made solid progress toward our target of reducing costs by
EUR 150 million this year. The sale of our life insurance business in Taiwan
and the decision to downsize our institutional markets division in the United
States are but two examples of our determination to execute on our strategy.
"The relatively stable new life sales and deposits quarter-over-quarter
reflect the strength of AEGON's franchise and the continued confidence of our
customers."
KEY PERFORMANCE INDICATORS
Notes Q1 Q4 Q1
amounts in EUR millions 2009 2008 2008
Underlying earnings before tax 1 (22) (181) 658
Net income 2 (173) (1,182) 153
New life sales 3 543 598 686
Total deposits 4 8,241 11,933 8,636
Value of new business (VNB) 201 233 186
Return on equity 5 (3.3%) (8.7%) 13.2%
a) The calculation of the IGD (Insurance Group Directive) capital surplus and
ratio is based on Solvency I capital requirements on IFRS for entities within
the EU (Pillar I for AEGON UK), and local regulatory solvency measurements for
non-EU entities. Specifically, required capital for the life insurance
companies in the US is calculated as two times the upper end of the Company
Action Level range (200%) as applied by the National Association of Insurance
Commissioners in the US
b) Core capital is the sum of shareholders' equity and the EUR 3 billion in
convertible core capital securities from Vereniging AEGON, funded by the Dutch
State
Strategic highlights and short-term priorities
Last year, AEGON set out three long-term strategic priorities:
1. To reallocate capital toward businesses with higher growth and return
prospects;
2. To improve growth and returns from existing businesses;
3. To manage AEGON as an international company.
Subsequently AEGON identified and announced three priorities to counter the
challenges of the current global financial crisis and position the company for
growth:
- Focus on capital preservation and accelerate the capital release program;
- EUR 150 million cost savings measures for 2009;
- Develop contingency plans for deterioration in financial markets.
As announced last June, AEGON is conducting an ongoing review of its portfolio
of businesses to ensure that they meet the criteria outlined in the strategy.
On February 17, 2009, AEGON announced it will downsize its institutional
spread based business in the Americas, which will result in lower credit risk
in the long run and a release of capital in the near term. On April 22, 2009,
AEGON announced the sale of its life insurance activities in Taiwan.
Capital preservation
In the current economic environment, acceleration of capital preservation
actions has been a priority. The actions taken and plans to be executed are
evidence of the financial flexibility within AEGON to manage through these
extraordinary times. They include:
- Releasing EUR 1.7 billion of capital in the second half of 2008;
- Commitment to release an additional EUR 1.5 billion of capital in 2009,
including EUR 0.3 billion from AEGON's institutional business. EUR 0.9 billion
has been realized in Q1 2009.
As a result of actions taken, the capital position of the company remains
strong with excess capital of EUR 2.7 billion over AA capital adequacy requirements at March 31, 2009.
Cost measures
AEGON announced cost savings measures totaling EUR 150 million in 2009.
Actions to achieve this include:
- Americas: no wage increases in 2009, staff reductions, deferred hiring,
reorganization of agency distribution;
- The Netherlands: reduction of contract services, process re-engineering,
general cost savings;
- United Kingdom: restructuring of IT, marketing and customer services, cost
containment and savings in distribution.
AEGON's cost measures are on track with approximately one third of the total
expense savings of 2009 realized across the company in the first quarter of
2009.
Capital management
Excess capital
During Q1 2009 financial markets remained challenging. Equity markets showed a
negative return, the S&P 500 lost 12% in the quarter, and real estate prices
also continued to decline. Except for some structured asset classes, spreads
in many credit market segments, though volatile during the quarter and still
at historically high and stressed levels, were tighter or stable when compared
to 2008 year-end levels. Volatilities in equity and bond markets were down
from the peaks recorded late 2008, while interest rates gradually increased
from historic lows. The negative impact from capital markets on AEGON's excess
capital in Q1 2009 was estimated at EUR 0.6 billion, primarily from lower
equity markets leading to additional minimum guarantee reserve strengthening.
The world economic outlook for 2009 remains uncertain and most countries are
facing a severe recession. Though policymakers continue to respond
aggressively to the economic crisis, specifically in the United States where
most of AEGON's credit risk is concentrated, AEGON expects an elevated level
of asset impairments in its investment portfolio in 2009. Impairments
negatively impacted AEGON's capital position in Q1 2009, reducing excess
capital by approximately EUR 0.2 billion. In addition, rating agencies have
been responding to the economic environment, revising their credit risk
assessments. In Q1 2009, for example, parts of AEGON's mortgage-related asset
portfolio, in particular securities backed by near-prime mortgages referred to
as Alt-A and negative amortization/Option ARM floaters, were downgraded to
below investment grade ratings. The rating migration of AEGON's US portfolio led
to higher capital requirements, reducing AEGON's excess
capital by an estimated EUR 0.6 billion for Q1 2009. AEGON considers the
rating migration experienced in Q1 2009 as extraordinarily high and expects it
not to be repeated to the same extent in coming quarters.
AEGON has preserved capital over the last few quarters and continues to focus
on freeing up capital from its businesses. Part of the EUR 0.9 billion capital
preservation in Q1 2009 is related to the decision to reduce investment risk
and increase the asset allocation of AEGON's investment portfolio to cash,
Treasury, government and agency bonds. At the end of Q1 2009, 25% of AEGON's
total general account assets was invested in these asset classes, up from 23%
at the end of 2008. The general account of AEGON in the Americas had an asset
allocation of 20% to cash, treasuries and agencies (16% at year-end 2008).
This investment strategy, executed in the last few quarters, has been
successful in a period of widening credit spreads across fixed income markets,
and has helped managing the maturity mismatch as a result of institutional
spread liabilities getting shorter as puts have been exercised. At the same
time, some structured assets classes have experienced extension of duration.
As a result of this investment strategy, AEGON has not been a forced seller of
assets at depressed prices. This strategy has preserved value, even though
currently the return on short-dated and government investments is lower. Going
forward, AEGON will continue to manage its credit portfolio actively. However,
with current market conditions and the maturity of assets and liabilities of
institutional spread business closer aligned now, AEGON will start to put part
of the new money inflows into highly rated credit investments.
At the end of Q1 2009, AEGON had EUR 2.7 billion excess capital over AA
capital adequacy requirements, down from EUR 2.9 billion at the end of 2008.
The positive impacts from capital preservation actions and statutory earnings
were mitigated by rating migration, impairments and lower equity markets on
required and available capital. At the end of Q1 2009, AEGON had an IGD
solvency ratio of approximately 170% (Q4 2008: 183%).
IFRS core capital
At the end of March 2009, core capital excluding the revaluation account was
EUR 16.4 billion, 77% of the total capital base, well above the minimum target
of 70%. Core capital including revaluation reserve was EUR 7.9 billion,
consisting of EUR 4.9 billion of shareholders' equity and EUR 3 billion of
convertible core capital securities provided by Vereniging AEGON, funded by
the Dutch State.
AEGON's revaluation account decreased during Q1 2009 by EUR 1.4 billion to
a negative EUR 8.5 billion. The lower revaluation account was the main driver
of the decline in shareholders' equity. The revaluation account was down
primarily due to the impact of higher
risk free long-term interest rates on bond values.
FINANCIAL OVERVIEW
Q1 Q1 At constant
EUR millions Notes 2009 2008 % currency %
Underlying earnings before
tax by line of business
Life and protection 239 252 (5) (11)
Individual savings and retirement N.M.
products (313) 116 N.M.
Pensions and asset management 42 121 (65) (64)
Institutional products 89 108 (18) (28)
Life reinsurance (23) 43 N.M. N.M.
Distribution 6 9 (33) (44)
General insurance (1) 17 N.M. N.M.
Interest charges and other (63) (17) N.M. N.M.
Share in net results of associates 2 9 (78) (78)
Underlying earnings before tax (22) 658 N.M. N.M.
Over/(under) performance of fair
value items (197) (441) 55
Operating earnings before tax (219) 217 N.M. N.M.
Operating earnings before tax
by line of business
Life and protection 179 213 (16) (22)
Individual savings and N.M.
retirement products (306) (58) N.M.
Pensions and asset management (135) (19) N.M. N.M.
Institutional products 13 (55) N.M. N.M.
Life reinsurance 59 31 90 65
Distribution 6 9 (33) (44)
General insurance (1) 17 N.M. N.M.
Interest charges and other (36) 70 N.M. N.M.
Share in net results of associates 2 9 (78) (78)
Operating earnings before tax (219) 217 N.M. N.M.
Gains/(losses) on investments 173 86 101 100
Impairment charges (386) (32) N.M. N.M.
Other income/(charges) (23) (54) 57 46
Income before tax (455) 217 N.M. N.M.
Income tax 282 (64) N.M. N.M.
Net income (173) 153 N.M. N.M.
Net underlying earnings (14) 503 N.M. N.M.
Net operating earnings (163) 175 N.M. N.M.
Underlying earnings
geographically
Americas (68) 478 N.M. N.M.
The Netherlands 72 113 (36) (36)
United Kingdom 7 45 (84) (88)
Other countries 30 39 (23) (10)
Holding and other (63) (17) N.M. N.M.
Underlying earnings before
tax (22) 658 N.M. N.M.
Operating earnings
geographically
Americas (100) 104 N.M. N.M.
The Netherlands (118) (41) (188) (188)
United Kingdom 4 45 (91) (88)
Other countries 31 39 (21) (10)
Holding and other (36) 70 N.M. N.M.
Operating earnings before tax (219) 217 N.M. N.M.
Commissions and expenses 1,618 1,416 14 8
of which operating expenses 842 783 8 4
Operational highlights
Overview
AEGON reported a net loss for Q1 2009 of EUR 173 million, a reversal of the
downward trend in net income in the second half of 2008. The loss in Q1 2009
was the result primarily of the impact of lower equity markets,
underperformance of fair value items and impairment charges.
Underlying earnings before tax of minus EUR 22 million were down mainly due to lower
financial markets compared to the same quarter last year, but improved
substantially compared to Q4 2008.
Fair value items, which primarily include certain investment classes in the
Netherlands and the Americas, as well as a number of products containing
financial guarantees, contributed a negative EUR 197 million to earnings in Q1
2009, a strong improvement compared to recent quarters.
Net income was also negatively impacted by impairment charges (EUR 386
million).
Gains on investments totaled EUR 173 million, largely due to gains on shares
and bonds in the Netherlands.
The underlying loss in Q1 2009, as well as impairments and mark-to-market
losses on the fair value items, resulted in a tax benefit of EUR 282 million.
Underlying earnings before tax
In Q1 2009 the underlying loss for the company amounted to EUR 22 million.
Excluding the impact from capital markets the earnings were approximately EUR
450 million.
The underlying loss in the Americas was USD 88 million. Lower equity markets
led to minimum guarantee reserves strengthening and accelerated amortization
of deferred policy acquisition costs (DPAC), primarily affecting earnings in
the variable annuity and life reinsurance business. The total impact on
earnings from lower equity markets amounted to approximately USD 600 million,
which also includes lower fee income due to reduced asset balances.
Underlying earnings in the Americas in Q1 2009 were also affected by the
decisions to lower the allocation to hedge funds and increase the asset
allocation to cash, treasury and agency bonds, in order to preserve capital.
In the Netherlands, underlying earnings were down 36% to EUR 72 million, a
result of lower technical results in the life and pension business and adverse
claims experience in general insurance. Also, investment income declined
across most businesses.
Underlying earnings in the United Kingdom, meanwhile, totaled GBP 7 million,
lower than last year, due primarily to the impact of lower equity and
corporate bond markets on fund related charges in the pension business.
Underlying earnings from Other countries amounted to EUR 30 million, lower
than last year, as a result of higher losses in Taiwan and currency
depreciation in Central & Eastern Europe.
Net income
Net income included a total underperformance result on fair value items of EUR
197 million. Fair value items primarily include certain (alternative)
investment classes in the Netherlands and the Americas, as well as a number of
products containing financial guarantees.
In Q1 2009, underperformance of alternative investment classes in the
Americas, in particular real estate as well as private equity and credit
derivatives amounted to EUR 163 million.
Fair value items also include the under/overperformance on assets held at fair
value through profit or loss and backing liabilities of a specific portfolio
of group pension contracts in the Netherlands. In Q1 2009 these assets
underperformed long-term expected returns by EUR 54 million. The assets
backing this portfolio of liabilities were accounted for as fair value through
profit or loss and have been replaced with assets accounted for as available
for sale as per Q2 2009. As a result this item will not recur as fair value
item going forward.
In order to maintain consistency in definitions, starting in Q4 2008, the net
impact of the fair value movements of guarantees and the related hedges in the
Netherlands has been included in fair value items.
Previously, differences in fair value between guarantees and related hedges,
referred to as hedge ineffectiveness, were reported in gains/losses on
investments. Results for prior years have been adjusted (see Financial
Supplement).
Net fair value gains of EUR 132 million on GMWB guarantees and related hedges
in the Americas were offset by the negative impact of EUR 135 million from
hedge ineffectiveness in the Netherlands.
The fair valuation of certain products with guarantees includes a credit
spread in the discount rates, a reflection of dislocated, volatile and
illiquid markets.
Gains on investments
Gains on investments of EUR 173 million include primarily gains on sales of
bonds in the Netherlands and in the United Kingdom, the sales of shares in the
Netherlands and positive results from economic hedges at holding level.
Impairment charges
Impairments of EUR 386 million included EUR 133 million on subprime mortgage
asset backed securities and EUR 72 million on residential mortgage backed
securities, both in the Americas. The remainder of impairments in the Americas
was mainly related to corporate bonds. Impairments in the Netherlands were
taken on equity and bonds.
Tax
The underlying loss in Q1 2009, as well as impairments and mark-to-market
losses on the fair value items, resulted in a tax benefit of EUR 282 million.
The high effective tax rate is mainly a result of tax credits and other
permanent differences.
Commissions and expenses
Compared to Q4 2008 commissions and expenses decreased by 13% to EUR 1.6
billion. Operating expenses were down 9% to EUR 842 million as a result of
cost savings, partly offset by restructuring charges and higher employee
pension costs.
Compared to Q1 2008 commissions and expenses increased by 14% (8% at constant
currency), primarily due to acceleration of DPAC amortization.
Operating expenses increased by 8% (4% at constant currency) compared to Q1
2008. An increase in employee benefit pension expenses and restructuring
expenses in several businesses offset expense savings from cost savings
programs. Operating expenses also increased as a result of acquisitions in
Central & Eastern Europe in 2008.
Sales
Total new life sales in Q1 2009 were down 9% compared to Q4 2008, and
decreased by 15% (at constant currency) to EUR 543 million compared to Q1
2008. With the exception of Spain, all countries recorded lower sales compared
to Q1 2008.
New life sales in the Americas were down 11% compared to Q4 2008 and 31%
compared to Q1 2008 in local currency, due to lower universal life sales in
the high net worth and variable life sales in the middle market as well as
lower sales of bank-owned and corporate-owned life insurance (BOLI/COLI)
contracts. Life reinsurance sales were down as well compared to last year, but
were in line with previous quarters.
In the Netherlands new life sales were up 51% compared to Q4 2008, primarily
due to a strong increase in group pension sales, which included several large
contracts. Sales were down 13% compared to Q1 2008, a result primarily of
lower individual life sales. Q1 2009 group pension sales were in line with
last year.
New life sales in the United Kingdom in the first quarter of the year were
down 9% compared to both Q1 2008 and Q4 2008. Sales were down across most
lines of business offsetting growth in annuities. In Q1 2008 new life sales in
the UK included European variable annuities, which are now reported in Other
countries. Including the sales of variable annuities in the UK in Q1 2009, the
new life sales declined with 6% compared to Q1 2008.
In Other countries new life sales in Q1 2009 were down 14% compared to Q4 2008
and down 11% compared to Q1 2008. New life sales in Spain rose to EUR 22
million, a reflection mainly of the incorporation of two new joint ventures,
as well as higher sales at existing joint ventures.
SALES
Q1 Q1 At constant
EUR millions Notes 2009 2008 % currency %
New life sales
Life single premiums 2,025 2,757 (27) (16)
Life recurring premiums annualized 341 410 (17) (13)
Total recurring plus 1/10 single 543 686 (21) (15)
New premium production accident and (13)
health insurance 164 166 (1)
New premium production general (19)
insurance 12 16 (25)
Gross deposits (on and off balance)
by line of business
Fixed annuities 1,628 306 N.M. N.M.
Variable annuities 714 685 4 (6)
Saving deposits 580 648 (10) (10)
Retail mutual funds 642 564 14 (4)
Pensions and asset management 2,829 3,183 (11) (19)
Institutional guaranteed products 1,848 3,249 (43) (51)
Life reinsurance 0 1 N.M. N.M.
Total gross deposits 8,241 8,636 (5) (15)
Total gross deposits excl. institutional
guaranteed products 6,393 5,387 19 7
Net deposits (on and off balance)
by line of business
Fixed annuities 688 (795) N.M. N.M.
Variable annuities 78 (152) N.M. N.M.
Saving deposits (67) (72) 7 7
Retail mutual funds (98) 171 N.M. N.M.
Pensions and asset management 506 1,170 (57) (70)
Institutional guaranteed products (2,354) (1,195) (97) (71)
Life reinsurance (16) (15) (7) 7
Total net deposits (1,263) (888) (42) (34)
Total net deposits excl. institutional
guaranteed products 1,091 307 N.M. 178
REVENUE GENERATING INVESTMENTS
At Mar. 31 At Dec. 31
2009 2008 %
Revenue generating investments
(total) 334,280 331,844 1
Investments general account 133,130 130,481 2
Investments for account of
policyholders 103,312 105,400 (2)
Off balance sheet investments
third parties 97,838 95,963 2
Sales through Caja de Ahorros del Mediterraneo (CAM), AEGON's largest bank
partner in Spain, which is an associate and therefore not consolidated, more
than tripled to EUR 66 million (on a 100% basis) in Q1 2009, mainly due to
higher sales of recurring premium risk products and sales of pension products
following changes in pension legislation.
In Central & Eastern Europe, new life sales totaled EUR 16 million, down 24%
(18% at constant currency) compared to Q1 2008. Single premium sales in Poland
were lower due to a decline in equity markets.
In Asia, new life sales decreased to EUR 12 million as increased sales in
China were more than offset by a decline in Taiwan.
Deposits
Total gross deposits excluding institutional guaranteed products were up 19%
to EUR 6.4 billion. Total gross on and off balance deposits for the company
decreased by 5% (down 15% in constant currency) to EUR 8.2 billion in Q1 2009.
The main driver for the decline was the significantly lower sales of both
institutional spread and institutional fee business in the Americas. AEGON
recently announced its decision to downsize its institutional spread based
business.
Fixed annuities sales in the Americas continued to be strong. AEGON continues
to expect these sales to decrease during the remainder of the year. Variable
annuity sales in the Americas were in line with sales in the last few
quarters. Sales of retirement plans in the pension business were strong,
particularly when taking into account the impact of lower financial markets on
the balances taken over. Managed assets and retail mutual fund sales were down
as a result of the turmoil in financial markets.
Gross deposits in Other countries tripled to EUR 706 million. Gross deposits
in Central & Eastern Europe were up 11% in constant currency. Despite the
adverse economic environment, pension deposits continue to be strong,
reflecting growth of the business as well as the incorporation of
acquisitions. Deposits in Asia totaled EUR 405 million, a result of the
inclusion of the asset management joint venture in China. In Q1 2009 deposits
in Other countries also included sales of European variable annuities for the
first time which amounted to EUR 111 million. A variable annuity product was
introduced in France through AEGON's partner La Mondiale.
Net deposits amounted to approximately EUR 1.1 billion, excluding
institutional guaranteed products. Net deposits for the company amounted to a
negative EUR 1.3 billion as a result of outflows in the institutional business
in the Americas, following the decision to downsize that business. This effect
offset net inflows in fixed annuities and the pension business in the Americas
and CEE, as well as net inflows in AEGON's asset management joint venture in
China.
Value of new business
The value of new business (VNB) for the company was up 8% compared to Q1 2008.
VNB was up due to increases in Spain and the Netherlands. The internal rate of
return is 17.8%, slightly lower than last year.
Appendix I - Americas A- The Netherlands A- United Kingdom A- Other countries
FINANCIAL OVERVIEW, Q1 2009 GEOGRAPHICALLY
amounts in
million EUR
(unless
otherwise
stated)
Holding,
United other
Americas Kingdom The United Other activities & Total
Nether- Elimin-
USD GBP Americas lands Kingdom countries ations EUR
Underlying earnings before tax
by line of business
221 7 Life and protection 169 55 7 8 0 239
Individual savings and retirement
(403) 0 products (309) (9) 0 5 0 (313)
10 3 Pensions and asset management 8 26 3 5 0 42
117 0 Institutional products 89 0 0 0 0 89
(30) 0 Life reinsurance (23) 0 0 0 0 (23)
0 (3) Distribution 0 9 (3) 0 0 6
0 0 General insurance 0 (9) 0 8 0 (1)
Interest charges and other (63) (63)
(3) 0 Share in net results of associates (2) 0 0 4 0 2
(88) 7 Underlying earnings before tax (68) 72 7 30 (63) (22)
Over/(under) performance of fair
(42) (3) value items (32) (190) (3) 1 27 (197)
(130) 4 Operating earnings before tax (100) (118) 4 31 (36) (219)
Operating earnings before tax
by line of business
176 7 Life and protection 135 29 7 8 0 179
Individual savings and retirement
(394) 0 products (303) (9) 0 6 0 (306)
(3) 0 Pensions and asset management (2) (138) 0 5 0 (135)
18 0 Institutional products 13 0 0 0 0 13
76 0 Life reinsurance 59 0 0 0 0 59
0 (3) Distribution 0 9 (3) 0 0 6
0 0 General insurance 0 (9) 0 8 0 (1)
Interest charges and other (36) (36)
(3) 0 Share in net results of associates (2) 0 0 4 0 2
(130) 4 Operating earnings before tax (100) (118) 4 31 (36) (219)
36 9 Gains/(losses) on investments 28 110 10 4 21 173
(370) (13) Impairment charges (284) (78) (14) (5) (5) (386)
1 (22) Other income/(charges) 1 0 (24) 0 0 (23)
(463) (22) Income before tax (355) (86) (24) 30 (20) (455)
290 27 Income tax 222 45 30 (21) 6 282
(173) 5 Net income (133) (41) 6 9 (14) (173)
(57) 10 Net underlying earnings (44) 55 11 9 (45) (14)
(90) 8 Net operating earnings (69) (87) 9 10 (26) (163)
Americas
- Underlying loss of USD 88 million; USD 600 million impact from decline in
equity markets
- Negative contribution of fair value items of USD 42 million on lower real
estate values offset by positive impact from fair value GMWB guarantees and
related hedges
- Impairments of USD 370 million
- Strong sales of fixed annuities and retirement plan sales; net deposits USD
1.6 billion (excl. institutional guaranteed products)
Overview
The decline in equity markets in Q1 2009 had a significant impact (approx. USD
600 million), on underlying earnings in the Americas and led to lower fee
income in many of the businesses, and reserve strengthening and accelerated
amortization of deferred policy acquisition costs in the variable annuities
business. In addition, earnings were affected by the decision to reduce
exposure to hedge fund investments while increasing the asset allocation to
cash, treasury and agency bonds.
Results in the Americas also included USD 370 million of post DPAC
impairments. The impairments pre DPAC were USD 427 million, of which the
majority (USD 267 million) was related to structured asset impairments.
Sales of fixed annuities continued to be strong during the quarter. AEGON
continues to expect these sales to decrease during the remainder of the year.
Sales of variable annuities were consistent with sales in the last few
quarters. New life sales were down in all lines of business. Sales of
retirement plans in the pension business were strong, particularly when taking
into account the impact of lower financial markets on the balances taken over.
Value of new business was down 13%, reflecting reduced institutional sales,
and lower VNB of life and protection, but higher VNB from fixed annuities and
pensions.
Underlying earnings before tax
AEGON reported an underlying loss before tax in the Americas for Q1 2009 of
USD 88 million:
- Earnings from Life & Protection declined 19% compared to Q1 2008 to USD 221
million, and include an USD 25 million persistency related charge following
the decline in equity markets this quarter. Earnings also include USD 26
million of increased employee pension expenses. In Q1 2008 underlying earnings
included exceptional unfavorable mortality charges of USD 34 million;
- Individual Savings & Retirement earnings came in at a loss of USD 403
million, due to the equity market impact on fee income, minimum guarantee
reserve strengthening and accelerated DPAC amortization (in total USD 460
million). In addition, changes in lapse assumptions affected earnings by USD
75 million;
- Pensions & Asset Management earnings decreased to USD 10 million, a result
primarily of lower fees from reduced asset balances;
- Earnings from the Institutional business were down 28% to USD 117 million. A
decrease in short-term rates continued to produce more positive spreads on
institutional guaranteed products, offset, however, by spread compression from
the higher asset allocation to cash and restructuring costs following the
decision to downsize the institutional business;
- In the Life Reinsurance business the underlying loss amounted to USD 30
million, including a USD 40 million impact from lower equity markets and
unfavorable mortality (USD 26 million).
Net income
AEGON reported a net loss for Q1 of USD 173 million in the Americas.
Fair value items showed an underperformance of USD 42 million, a result
primarily of underperformance of alternative assets like real estatepartnerships,
as well as private equity, and lower market values of credit
derivatives. These were offset by the positive impact of higher interest rates
on the fair value of GMWB guarantees and positive result on GMWB related
hedges.
Results in the Americas also included USD 370 million of post DPAC
impairments. The impairments pre DPAC were USD 427 million, of which the
majority (USD 267 million) was related to structured asset impairments,
including securities backed by subprime mortgages (USD 173 million).
The high effective tax rate is mainly a result of the tax benefits for
permanent differences and tax credits which increase the effective tax rate in
the current overall pre-tax loss situation. In addition, pre-tax earnings from
Ireland being taxed at their lower rate also resulted in an increase in the
effective tax rate in the current overall pre-tax loss situation.
Commissions and expenses
Total commissions and expenses increased 12% in Q1, primarily due to
acceleration of DPAC amortization. Q1 operating expenses were up 3%. An
increase in employee pension plan costs (USD 43 million) as well as
restructuring expenses, primarily related to the downsizing of institutional
business (USD 22 million), offset the positive contributions of cost
initiatives.
Sales and deposits
Total new life sales in the Americas were down 31% in the quarter, driven
primarily by a decline in universal life sales in the high net worth market
and variable life sales in the middle market. Retail life sales were in line
with Q4 2008. The BOLI/COLI market has declined significantly as a result of
the financial crisis and its impact on banks. Life reinsurance sales were down
as well compared to last year, but were in line with previous quarters.
Total gross deposits, excluding institutional guaranteed products, were in
line with Q1 2008 and increased by 2% compared to Q4 2008. Net deposits
excluding institutional guaranteed products were up significantly to USD 1.6
billion.
Fixed annuities sales came in strong again after several quarters of growth.
AEGON continues to expect these sales to decrease during the remainder of the
year. Variable annuity sales were in line with sales in the last few quarters,
while retail mutual fund sales suffered from lower financial markets as
expected.
Sales of retirement plans in the pension business were strong, particularly
when taking into account the impact of lower financial markets on the balances
taken over. Managed assets clearly declined also because of financial market
turmoil.
Sales of institutional guaranteed products are low, after the decision to
downsize the institutional spread based business.
Sales of accident and health products were in line with sales over the last
few quarters.
Value of new business
The value of new business (VNB) in the Americas amounted to USD 103 million,
and the internal rate of return (IRR) was 10.3%. Declines in VNB and IRR were
noticeable in the retail life business due to lower production and lower
investment return assumptions. VNB in the institutional business was down due
to the discontinuance of new sales. The VNB and IRR in the variable annuity
business were negatively affected by hedge costs. VNB was up significantly for
fixed annuities on higher production while VNB for the pension and reinsurance
businesses were in line with the prior year. Please refer to page 29 for more
detailed information on VNB.
Revenue generating investments
AEGON's total revenue generating investments at the end of March 2009 totaled
USD 279 billion, down 2% from three months earlier
AMERICAS - EARNINGS
Q1 Q1
USD millions Notes 2009 2008 %
Underlying earnings before tax
by line of business
Life 153 159 (4)
Accident and health 68 115 (41)
Life and protection 221 274 (19)
Fixed annuities 86 95 (9)
Variable annuities (480) 70 N.M.
Retail mutual funds (9) 4 N.M.
Individual savings and retirement
products (403) 169 N.M.
Pensions and asset management 10 45 (78)
Institutional guaranteed products 105 141 (26)
BOLI/COLI 12 21 (43)
Institutional products 117 162 (28)
Life reinsurance (30) 65 N.M.
Share in net results of associates (3) 1 N.M.
Underlying earnings before tax (88) 716 N.M.
Over/(under) performance of fair
value items (42) (560) 93
Operating earnings before tax (130) 156 N.M.
Operating earnings before tax
by line of business
Life 120 135 (11)
Accident and health 56 109 (49)
Life and protection 176 244 (28)
Fixed annuities 41 8 N.M.
Variable annuities (426) (103) N.M.
Retail mutual funds (9) 4 N.M.
Individual savings and retirement
products (394) (91) N.M.
Pensions and asset management (3) 38 N.M.
Institutional guaranteed products 8 (99) N.M.
BOLI/COLI 10 17 (41)
Institutional products 18 (82) N.M.
Life reinsurance 76 46 65
Share in net results of associates (3) 1 N.M.
Operating earnings before tax (130) 156 N.M.
Gains/(losses) on investments 36 (71) N.M.
Impairment charges (370) (21) N.M.
Other income/(charges) 1 0 N.M.
Income before tax (463) 64 N.M.
Income tax 290 (103) N.M.
Net income (173) (39) N.M.
Net underlying earnings (57) 522 N.M.
Net operating earnings (90) 111 N.M.
Commissions and expenses 1,311 1,169 12
of which operating expenses 562 547 3
For the amounts in euro see the Financial Supplement.
AMERICAS - SALES
Q1 Q1
USD millions Notes 2009 2008 %
New life sales
Life single premiums 91 241 (62)
Life recurring premiums annualized 173 238 (27)
Total recurring plus 1/10 single 182 262 (31)
Life 128 187 (32)
BOLI/COLI 2 14 (86)
Life reinsurance 52 61 (15)
Total recurring plus 1/10 single 182 262 (31)
New premium production accident
and health insurance 203 237 (14)
Gross deposits (on and off balance)
by line of business
Fixed annuities 2,120 459 N.M.
Variable annuities 780 974 (20)
Retail mutual funds 307 773 (60)
Pensions and asset management 3,169 4,252 (25)
Institutional guaranteed products 2,407 4,870 (51)
Life reinsurance 0 2 N.M.
Total gross deposits 8,783 11,330 (22)
Total gross deposits excl. institutional
guaranteed products 6,376 6,460 (1)
Net deposits (on and off balance)
by line of business
Fixed annuities 896 (1,192) N.M.
Variable annuities (40) (279) 86
Retail mutual funds (256) 247 N.M.
Pensions and asset management 1,053 1,644 (36)
Institutional guaranteed products (3,065) (1,792) (71)
Life reinsurance (20) (23) 13
Total net deposits (1,432) (1,395) (3)
Total net deposits excl. institutional
guaranteed products 1,633 397 N.M.
REVENUE GENERATING
INVESTMENTS
At Mar. At Mar.
31 31
2009 2008 %
Revenue generating investments
(total) 279,399 286,167 (2)
Investments general account 117,934 120,790 (2)
Investments for account of
policyholders 55,791 58,943 (5)
Off balance sheet investments
third parties 105,674 106,434 (1)
For the amounts in euro see the Financial Supplement.
The Netherlands
- Underlying earnings declined 36% to EUR 72 million
- Life sales down 13%, due to decline in retail market; group pension sales
were strong
- Value of new business of EUR 31 million; internal rate of return of 14.1%
Overview
The Netherlands reported a net loss in Q1 2009 of
EUR 41 million. Underlying earnings were down 36%, a result of lower technical
results in the life and pension business and adverse claims experience in
general insurance. Also, investment income declined across most businesses.
Fair value items underperformed long-term expectations, a result mainly from
differences in fair value between guarantees and related hedges, referenced as
hedge ineffectiveness.
Impairments, primarily on equity investments, totaled EUR 78 million, while
investment gains from the sale of bonds and shares amounted to EUR 110
million.
Underlying earnings before tax
- The Life business reported earnings of EUR 44 million, up from last year on
higher investment income offset by lower technical results.
- In Accident and Health underlying earnings were EUR 11 million, an increase
of EUR 3 million, mainly a result of a technical provision release.
- The Savings business reported a loss of EUR 9 million, due to pressure on
margins and volumes from fierce competition in the savings market.
- Earnings from Pensions & Asset Management amounted to EUR 26 million down
from Q1 2008, primarily the result of lower investment income.
- Earnings from Distribution amounted to EUR 9 million, below last year's
result due to the slowdown in the real estate market.
- General insurance earnings were down significantly to a loss of EUR 9
million, due mainly to higher claims experience.
Net income
Fair value items include the under/overperformance on assets held at fair
value through profit and loss, backing liabilities of a specific portfolio of
group pension contracts held in the general account. In Q1 2009 these assets
underperformed long-term expected returns by EUR 54 million. The assets
backing this portfolio of liabilities were accounted for as fair value through
profit or loss and have been replaced with assets accounted for as available
for sale as per Q2 2009. As a result this item will not recur as fair value
item going forward.
Also, in order to maintain consistency in definitions, starting in Q4 2008,
the net impact of the fair value movements of guarantees and the related
hedges has been included in fair value items. Previously, differences in fair
value between guarantees and related hedges, referenced as hedge
ineffectiveness, were reported in gains/losses on investments. Earnings in Q1
2009 include a EUR 135 million negative impact from hedge ineffectiveness.
Impairments of EUR 78 million were primarily related to equity investments and
corporate credit investments. Investment gains amounted to EUR 110 million and
include gains on bonds and shares sold during the quarter.
The positive contribution from tax is due to tax deductable impairments and
losses on fair value items, as well as tax exempt income. The high effective
tax rate is mainly a result of the tax exempt items which increase the
effective tax rate in the current overall pre-tax loss situation.
Commissions and expenses
Commissions and expenses were down 1% and operating expenses decreased also by
1%. Higher expenses for employee benefits were offset by lower project related
expenses.
Sales and deposits
Pension sales were in line with last year due to several large contracts sold
during the quarter. Renewal rates in the pension business continued to
improve. Sales of both single and regular premium individual life products
were down compared to last year, following increased pricing competition in
the immediate annuity market, as well as lower demand for regular premium
products. Sales in accident & health were up as a result of higher sales of
alternative disability products to WIA product. Sales of general insurance
products were down on last year due to the competitive market.
Gross deposits were down by 15% compared with Q1 2008, due to fierce
competition. Net deposits in the savings business improved significantly
compared to Q4 2008.
Value of new business
The value of new business (VNB) increased to
EUR 31 million and the internal rate of return improved to 14.1%, primarily as
a result of a margin improvement in the mortgage business.
Please refer to page 29 for more detailed information on VNB.
Revenue generating investments
At the end of March 2009, revenue generating investments totaled EUR 63.4
billion; in line with December 2008 levels.
THE NETHERLANDS - EARNINGS
Q1 Q1
EUR millions Notes 2009 2008 %
Underlying earnings before tax
by line of business
Life 44 32 38
Accident and health 11 8 38
Life and protection 55 40 38
Saving products (9) 1 N.M.
Individual savings and retirement
products (9) 1 N.M.
Pensions and asset management 26 51 (49)
Distribution 9 11 (18)
General insurance (9) 10 N.M.
Underlying earnings before tax 72 113 (36)
Over/(under) performance of fair
value items (190) (154) (23)
Operating earnings before tax (118) (41) (188)
Operating earnings before tax
by line of business
Life 18 13 38
Accident and health 11 8 38
Life and protection 29 21 38
Saving products (9) 1 N.M.
Individual savings and retirement
products (9) 1 N.M.
Pensions and asset management (138) (84) (64)
Distribution 9 11 (18)
General insurance (9) 10 N.M.
Operating earnings before tax (118) (41) (188)
Gains/(losses) on investments 110 76 45
Impairment charges (78) (17) N.M.
Income before tax (86) 18 N.M.
Income tax 45 1 N.M.
Net income (41) 19 N.M.
Net underlying earnings 55 92 (40)
Net operating earnings (87) (22) N.M.
Commissions and expenses 307 310 (1)
of which operating expenses 217 219 (1)
THE NETHERLANDS - SALES
Q1 Q1
EUR millions Notes 2009 2008 %
New life sales
Life single premiums 391 445 (12)
Life recurring premiums annualized 23 26 (12)
Total recurring plus 1/10 single 62 71 (13)
Life 23 31 (26)
Pensions 39 40 (3)
Total recurring plus 1/10 single 62 71 (13)
New premium production accident
and health insurance 7 6 17
New premium production general
insurance 7 8 (13)
Gross deposits (on and off balance)
by line of business
Saving deposits 580 648 (10)
Pensions and asset management 11 47 (77)
Total gross deposits 591 695 (15)
Net deposits (on and off balance)
by line of business
Saving deposits (67) (72) 7
Pensions and asset management (113) 36 N.M.
Total net deposits (180) (36) N.M.
REVENUE GENERATING
INVESTMENTS
At Mar. At Mar.
31 31
2009 2008 %
Revenue generating investments
(total) 63,427 63,079 1
Investments general account 32,875 32,163 2
Investments for account of
policyholders 19,357 19,133 1
Off balance sheet investments
third parties 11,195 11,783 (5)
The United Kingdom
- Underlying earnings before tax declined to GBP 7 million on lower fund
related charges in the pension business
- New life sales down 9% on lower bond and pension sales, offsetting sales
increases in annuities
- Margins and volume in the annuity business drive value of new business
increase
Overview
Lower bond and equity markets compared to Q1 last year led to a decline in
underlying earnings. Increases in sales of annuities and group pensions were
more than offset by sales declines in offshore bonds and individual pensions.
Value of new business continued its recent strong growth, a result primarily
of a shift in business mix to higher margin products.
Results from Variable Annuities are included in the Other countries section of
the results release from Q1 2009.
Underlying earnings before tax
Underlying earnings before tax declined to
GBP 7 million, due primarily to the impact of lower equity and corporate bond
markets on fund related charges in AEGON's unit linked pension business.
- Earnings from Life & Protection came in at GBP 7 million, slightly below
results in the comparable quarter last year. The continued positive impact on
earnings from business growth was more than offset by mortality experience and
costs related to the expense management program.
- Earnings from Pensions & Asset Management amounted to GBP 3 million, down
GBP 25 million, due to impact from lower equity and bond markets on fund
related charges;
- Distribution activities in the first quarter experienced a loss of GBP 3
million, primarily a result of more difficult market conditions for mortgage
and investment products.
Net income
Net income was GBP 5 million, a decline due to lower underlying earnings,
impairments (GBP 13 million) and underperformance of fair value items.
Investment gains of GBP 9 million, and a tax credit due to the change in the
sources of earnings contributed positively to earnings.
Commissions and expenses
Total commissions and expenses in the quarter were up 1%, while commissions
were down due to a change in business mix. Operating expenses increased by 2%
to GBP 100 million, due mainly to a release of employee benefit provisions in
Q1 2008 and restructuring costs in Q1 2009.
Sales and deposits
New life sales were down 9% and came in at GBP 265 million in Q1 2009. New
life sales in Q1 2008 included European variable annuities, which are reported
as deposits in Other countries from Q1 2009. Excluding sales of variable
annuities in Q1 2008, new life sales were down 8%. Including the sales of
variable annuities in the UK in Q1 2009, the new life sales declined with 6%
compared to Q1 2008.
Sales were down across most lines of business offsetting continued strong
growth in annuities.
- Life annualized premium production increased 29% to GBP 71 million, a result
of continued strong sales of annuities;
- Sales of pensions declined 18% to GBP 194 million as sales of both group
pension and individual pension were down this quarter. In addition, sales of
unit-linked bonds declined, primarily driven by lower offshore bond sales (see
Financial Supplement for more detail).
Total deposits amounted to GBP 181 million, an increase compared to last year,
on both higher sales of retail mutual funds and third party managed assets.
Value of new business
The value of new business (VNB) increased 30% to GBP 52 million (excluding
European variable annuities) compared to Q1 2008, driven by the shift in sales
to high-margin areas, such as annuities. As a result the internal rate of
return on new business in Q1 in the United Kingdom rose to 15.0% (excluding
European variable annuities), up from 13.0% in Q1 2008.
Please refer to page 29 for more detailed information on VNB.
Revenue generating investments
At the end of March 2009, revenue generating investments totaled GBP 44.2
billion, a decline of 6% from GBP 47.1 billion at the end of 2009. The
decrease reflects primarily lower financial markets.
UNITED KINGDOM - EARNINGS
Q1 Q1
GBP millions Notes 2009 2008 %
Underlying earnings before tax
by line of business
Life 7 8 (13)
Life and protection 7 8 (13)
Pensions and asset management 3 28 (89)
Distribution (3) (2) (50)
Underlying earnings before tax 7 34 (79)
Over/(under) performance of fair
value items (3) 0 N.M.
Operating earnings before tax 4 34 (88)
Operating earnings before tax
by line of business
Life 7 8 (13)
Life and protection 7 8 (13)
Pensions and asset management 0 28 N.M.
Distribution (3) (2) (50)
Operating earnings before tax 4 34 (88)
Gains/(losses) on investments 9 2 N.M.
Impairment charges (13) 0 N.M.
Other income/(charges) 9 (22) (41) 46
Income before tax (22) (5) N.M.
Income tax attributable to policyholder
return 22 41 (46)
Income before income tax on
shareholders return 0 36 N.M.
Income tax on shareholders return 5 (5) N.M.
Net income 5 31 (84)
Net underlying earnings 10 30 (67)
Net operating earnings 8 30 (73)
Commissions and expenses 159 157 1
of which operating expenses 100 98 2
For the amounts in euro see the Financial Supplement.
UNITED KINGDOM - SALES
Q1 Q1
GBP millions Notes 2009 2008 %
New life sales 10
Life single premiums 1,317 1,498 (12)
Life recurring premiums annualized 133 141 (6)
Total recurring plus 1/10 single 265 291 (9)
Life 71 55 29
Pensions 194 236 (18)
Total recurring plus 1/10 single 265 291 (9)
Gross deposits (on and off balance)
by line of business
Pensions and asset management 181 112 62
Total gross deposits 181 112 62
Net deposits (on and off balance)
by line of business
Pensions and asset management (257) (41) N.M.
Total net deposits (257) (41) N.M.
REVENUE GENERATING
INVESTMENTS
At Mar. At Mar.
31 31
2009 2008 %
Revenue generating investments
(total) 44,208 47,122 (6)
Investments general account 5,157 4,964 4
Investments for account of
policyholders 37,188 39,869 (7)
Off balance sheet investments
third parties 1,863 2,289 (19)
For the amounts in euro see the Financial Supplement.
Other Countries
- Underlying earnings before tax declined by 10% at constant currency
- Life sales of EUR 50 million resilient with 11% decline at constant currency
- Continued strong retail mutual fund sales in China lead to record deposits
of EUR 706 million
- VNB of EUR 33 million, down from last year on lower sales
Overview
Underlying earnings from Other countries amounted to EUR 30 million, EUR 9
million lower than last year, a result of higher losses in Taiwan, a lower
contribution from France and lower earnings in Central & Eastern Europe (CEE)
due to significantly depreciated currencies in CEE. In Q1 2008 earnings from
CEE included a one-off reserve release in Hungary of EUR 4 million.
Life sales were down 11% at constant currency, as declining equity markets
impacted single premium unit-linked sales in Poland and in Asia. The strong
growth in deposits is a reflection of the inclusion of the Chinese asset
management joint venture. The pension business in CEE continues to perform
well in terms of sales and net deposits.
Results from European Variable Annuities are included in the Other countries
section of the results release from Q1 2009.
Underlying earnings before tax
Underlying earnings before tax from Other countries declined to EUR 30 million
in Q1 2009.
- Earnings from Life & Protection declined mainly as a result of losses in
Asia. In CEE income on unit-linked business was down due to lower asset
balances. In Q1 2008 life earnings from CEE included a one-off reserve release
in Hungary of EUR 4 million;
- The asset management joint venture in China performed well. As a result,
earnings from Individual savings and retirement products increased to EUR 5
million;
- Pensions & Asset management earnings increased to EUR 5 million as a result
of the inclusion of a Polish pension fund and the introduction of DPAC in the
pension businesses in Hungary and Poland;
- Earnings from General insurance were EUR 8 million, in line with last year;
- Earnings from associate companies declined due additional start-up costs at
AEGON's joint ventures in India and a lower contribution from La Mondiale,
AEGON's French partner.
Net income
Net income declined by two thirds to EUR 9 million as a result of lower
underlying earnings. Gains on investment were offset by impairment charges. An
increased impairment of deferred tax assets in Taiwan resulted in a high
effective tax rate for Other countries.
Commissions and expenses
Commissions and expenses rose 8% in Q1 2009 to EUR 98 million, as a result of
higher operating expenses. Operating expenses were up due to the inclusion of
new operations in Turkey and Asia, the inclusion of acquired pension funds in
Hungary and Poland and two new joint ventures in Spain.
Sales and deposits
New life sales in Q1 2009 declined 11% to EUR 50 million.
- In Central & Eastern Europe, sales of recurring premium life insurance
declined 5% as strong performances in the Czech Republic and Slovakia were
offset by declines in Hungary and Poland. Single premium sales were sharply
lower, particularly in Poland, because of continued market turmoil. Total new
life sales in CEE amounted to EUR 16 million, down 24% or 18% at constant
currency;
- In Spain, sales of life insurance rose 22% to EUR 22 million, due primarily
to the inclusion of two new joint ventures with regional savings banks and
higher sales of existing joint ventures;
- AEGON's largest bank partner in Spain, which is an associate and therefore
not consolidated, more than tripled sales to EUR 66 million (on a 100% basis),
as a result of an increased focus on risk products and higher pension (PPA)
sales;
- In Asia, new life sales decreased to EUR 12 million as increased sales in
China and India were more than offset by a decline in Taiwan.
Gross deposits tripled to EUR 706 million. Net deposits more than doubled to
EUR 300 million. The strong growth in deposits is a reflection of inclusion of
the Chinese asset management joint venture. The pension business in CEE
continues to perform well in terms of sales and net deposits. Deposits in Q1
2009 include sales of European variable annuities of EUR 111 million.
General insurance
Non-life sales in Hungary declined to EUR 5 million as a result of continued
focus on writing profitable business in an increasingly competitive
environment.
Value of new business
The value of new business (VNB) from Other countries was EUR 33 million, a
decrease of EUR 9 million compared to Q1 2008, primarily as a result of lower
sales.
In both Asia and CEE, the decrease in VNB was a reflection of lower sales. In
Q1 2008 VNB included EUR 7 million related the introduction and launch of a
mandatory pension fund in Romania. In Spain, VNB increased mainly as a result
of higher sales in CAM.
The internal rate of return in Asia was 9.6% as a result of changes in
economic assumptions. The reduction of the internal rate of return to 34.4% in
CEE is mainly a reflection of lower margins due to higher expense assumptions.
In Spain, AEGON's bank distribution partnerships continued to deliver high
rates of return.
Please refer to page 29 for more detailed VNB information.
Revenue generating investments
In 1Q 2009, revenue generating investments declined 2% from year-end 2008
levels to EUR 13.4 billion, mainly as a result of lower equity markets.
OTHER COUNTRIES - EARNINGS
Q1 Q1
EUR millions Notes 2009 2008 %
Underlying earnings before tax
by line of business
Life 7 17 (59)
Accident and health 1 2 (50)
Life and protection 8 19 (58)
Variable annuities 0 1 N.M.
Saving products 1 0 N.M.
Retail mutual funds 4 1 N.M.
Individual savings and retirement
products 5 2 150
Pensions and asset management 5 3 67
General insurance 8 7 14
Share in net results of associates 4 8 (50)
Underlying earnings before tax 30 39 (23)
Over/(under) performance of fair
value items 1 0 N.M.
Operating earnings before tax 31 39 (21)
Operating earnings before tax
by line of business
Life 7 17 (59)
Accident and health 1 2 (50)
Life and protection 8 19 (58)
Variable annuities 1 1 0
Saving products 1 0 N.M.
Retail mutual funds 4 1 N.M.
Individual savings and retirement
products 6 2 200
Pensions and asset management 5 3 67
General insurance 8 7 14
Share in net results of associates 4 8 (50)
Operating earnings before tax 31 39 (21)
Gains/(losses) on investments 4 0 N.M.
Impairment charges (5) (1) N.M.
Income before tax 30 38 (21)
Income tax (21) (10) (110)
Net income 9 28 (68)
Net underlying earnings 9 27 (67)
Net operating earnings 10 27 (63)
Commissions and expenses 98 91 8
of which operating expenses 52 43 21
OTHER COUNTRIES - SALES
Q1 Q1
EUR millions Notes 2009 2008 %
New life sales 10
Life single premiums 112 172 (35)
Life recurring premiums annualized 39 39 0
Total recurring plus 1/10 single 50 56 (11)
Life 50 56 (11)
Total recurring plus 1/10 single 50 56 (11)
New premium production accident
and health insurance 2 2 0
New premium production general
insurance 5 8 (38)
Gross deposits (on and off balance)
Variable annuities 115 35 N.M.
Retail mutual funds 406 48 N.M.
Pensions and asset management 185 151 23
Total gross deposits 706 234 N.M.
Net deposits (on and off balance)
Variable annuities 109 34 N.M.
Retail mutual funds 98 6 N.M.
Pensions and asset management 93 92 1
Total net deposits 300 132 127
REVENUE GENERATING
INVESTMENTS
At Mar. At Mar.
31 31
2009 2008 %
Revenue generating investments
(total) 13,350 13,609 (2)
Investments general account 6,030 6,243 (3)
Investments for account of
policyholders 2,085 2,067 1
Off balance sheet investments
third parties 5,235 5,299 (1)
APPENDIX II - Talbes
NET UNDERLYING EARNINGS
GEOGRAPHICALLY
Q1 Q1
EUR millions Notes 2009 2008 %
1
Americas (44) 348 N.M.
The Netherlands 6 55 92 (40)
United Kingdom 11 40 (73)
Other countries 9 27 (67)
Holding and other (45) (4) N.M.
Net underlying earnings (14) 503 N.M.
OVER/UNDER PERFORMANCE
OF FAIR VALUE ITEMS
EUR millions
Operating earnings before tax (219) 217 N.M.
(Over)/under performance of fair
value items - Americas 32 374 (91)
(Over)/under performance of fair
value items - The Netherlands 6 190 154 23
(Over)/under performance of fair
value items - United Kingdom 3 0 N.M.
(Over)/under performance of fair
value items - Other countries (1) 0 N.M.
(Over)/under performance of fair
value items - Holding and other (27) (87) 69Underlying earnings before tax (22) 658 N.M.
Net underlying earnings (14) 503 N.M.
AMERICAS - OVER/UNDER
PERFORMANCE OF FAIR VALUE
ITEMS
USD millions
Over/(under) performance of fair
value items by line of business
Life and protection (45) (30) (50)
Individual savings and retirement products 9 (260) N.M.
Pensions and asset management (13) (7) (86)
Institutional products (99) (244) 59
Life reinsurance 106 (19) N.M.
Total over/(under) performance of
fair value items (42) (560) 93
Total over/(under) performance of
fair value items in EUR (32) (374) 91
THE NETHERLANDS - OVER/UNDER
PERFORMANCE OF FAIR VALUE
ITEMS
EUR millions 6
Over/(under) performance of fair
value items by line of business
Life and protection (26) (19) (37)
Pensions and asset management (164) (135) (21)
Total over/(under) performance of
fair value items (190) (154) (23)
UNITED KINGDOM - OVER/UNDER
PERFORMANCE OF FAIR VALUE
ITEMS
GBP millions
Over/(under) performance of fair
value items by line of business
Pensions and asset management (3) 0 N.M.
Total over/(under) performance of
fair value items (3) 0 N.M.
OTHER COUNTRIES - OVER/UNDER
PERFORMANCE OF FAIR VALUE
ITEMS
EUR millions
Over/(under) performance of
fair value items by line of business
Variable annuities 1 0 N.M.
Total over/(under) performance of
fair value items 1 0 N.M.
SALES
Q1 Q1
EUR millions 2009 2008 %
New life sales 543 686 (21)
Gross deposits (on and off balance) 8,241 8,636 (5)
New life sales
Life single premiums 2,025 2,757 (27)
Life recurring premiums annualized 341 410 (17)
Total recurring plus 1/10 single 543 686 (21)
Life 249 284 (12)
Pensions 253 352 (28)
BOLI/COLI 1 9 (89)
Life reinsurance 40 41 (2)
Total recurring plus 1/10 single 543 686 (21)
New premium production accident
and health insurance 164 166 (1)
New premium production general
insurance 12 16 (25)
Gross deposits (on and off balance)
Fixed annuities 1,628 306 N.M.
Variable annuities 714 685 4
Saving products 580 648 (10)
Retail mutual funds 642 564 14
Pensions and asset management 2,829 3,183 (11)
Institutional guaranteed products 1,848 3,249 (43)
Life reinsurance 0 1 N.M.
Total gross deposits 8,241 8,636 (5)
Total gross deposits excl. institutional
guaranteed products 6,393 5,387 19
Net deposits (on and off balance)
by line of business
Fixed annuities 688 (795) N.M.
Variable annuities 78 (152) N.M.
Saving deposits (67) (72) 7
Retail mutual funds (98) 171 N.M.
Pensions and asset management 506 1,170 (57)
Institutional guaranteed products (2,354) (1,195) (97)
Life reinsurance (16) (15) (7)
Total net deposits (1,263) (888) (42)
Total net deposits excl. institutional
guaranteed products 1,091 307 N.M.
EMPLOYEE NUMBERS At At
Mar. Dec.
31 31
2009 2008
Number of employees 31,156 31,425
VALUE OF NEW BUSINESS
AND IRR VNB VNB
EUR EUR
Notes Q1 Q1
EUR millions, after tax 2009 2008 %
Americas 79 79 0
The Netherlands 31 12 158
United Kingdom 57 53 8
Asia 2 5 (60)
Central and Eastern Europe 12 23 (48)
Other European Countries 26 14 86
VA Europe (7) 0 N.M.
Total 201 186 8
IRR % IRR%
Americas 10.3 12.6
The Netherlands 14.1 10.7
United Kingdom 15.0 13.0
Asia 9.6 17.0
Central and Eastern Europe 34.4 39.0
Other European Countries 48.8 43.2
VA Europe (3.8) -
Total 17.8 18.4
MODELED NEW BUSINESS, Premium
APE AND DEPOSITS business
APE
Notes Q1 Q1
EUR millions 2009 2008 %
11
Americas 266 295 (10)
The Netherlands 78 73 7
United Kingdom 312 378 (17)
Asia 13 17 (24)
Central and Eastern Europe 17 25 (32)
Other European Countries 84 59 42
Total 769 847 (9)
Deposit
business
Deposits
Americas 5,252 5,997 (12)
Asia 3 7 (57)
Central and Eastern Europe 22 17 29
Other European Countries 0 6 N.M.
VA Europe 111 0 N.M.
Total 5,389 6,026 (11)
Premium
business
VNB/PVNBP SUMMARY VNB PVNBP VNB/ VNB/
PVNBP APE
Notes Q1
EUR millions 2009 % %
12
Americas 31 1,230 2.6 11.8
The Netherlands 31 647 4.8 39.6
United Kingdom 57 2,024 2.8 18.3
Asia 2 76 2.2 12.7
Central and Eastern Europe 7 102 6.6 39.8
Other European Countries 26 753 3.5 31.3
Total 154 4,832 3.2 20.0
Deposit
business
VNB PVNBP VNB/ VNB/
PVNBP Deposits
12
Americas 47 6,386 0.7 0.9
Asia 1 13 5.2 21.7
Central and Eastern Europe 6 195 2.9 25.5
VA Europe (7) 111 (5.9) (5.9)
Total 47 6,705 0.7 0.9
Notes:
1) Certain assets held by AEGON Americas, AEGON The Netherlands and AEGON UK are carried at
fair value, and managed on a total return basis, with no offsetting changes in the
valuation of related liabilities. These include assets such as hedge funds, private
equities, real estate limited partnerships, convertible bonds and structured products.
Underlying earnings exclude any over- or underperformance compared to management's
long-term expected return on these assets. Based on current holdings and asset class
returns, the long-term expected return on an annual basis is 8-10%, depending on the
asset class, including cash income and market value changes. The expected earnings from
these assets classes are net of DPAC where applicable.
In addition, certain products offered by AEGON Americas contain guarantees and are
reported on a fair value basis, including the segregated funds offered by AEGON Canada
and the total return annuities and guarantees on variable annuities of AEGON USA. The
earnings on these products are impacted by movements in equity markets and risk free
interest rates. Short-term developments in the financial markets may therefore cause
volatility in earnings. Included in underlying earnings is a long-term expected return on
these products and any over- or underperformance compared to management's expected return
is excluded from underlying earnings. The fair value movements of certain guarantees and
the fair value change of derivatives that hedge certain risks on these guarantees of
AEGON the Netherlands and Variable Annuities Europe (included in Other countries) are
excluded from underlying earnings.
The Holding includes certain issued bonds that are held at fair value through profit or
loss. The interest rate risk on these bonds is hedged using swaps. The change in AEGON's
credit spread resulted in a gain of EUR 27 mln in Q1 2009 on the fair value movement on
these bonds.
2) Net income refers to net income attributable to equity holders of AEGON N.V.
3) New life sales is defined as new recurring premiums + 1/10 of single premiums.
4) Deposits on and off balance sheet.
5) Return on equity is calculated by dividing the net underlying earnings after cost of
leverage by the average shareholders' equity excluding the preferred shares and the
revaluation reserve.
6) In order to maintain consistency in definitions, starting in the fourth quarter 2008, the
net impact of the fair value movements of guarantees and the related hedges in the
Netherlands has been excluded from underlying earnings. Previously, differences in fair
value between guarantees and related hedges, referenced as hedge ineffectiveness, were
reported in gain/losses on investments. Results from previous years have been adjusted.
7) Capital securities that are denominated in foreign currencies are, for purposes of
calculating the capital base ratio, revalued to the period-end exchange rate.
8) All ratios exclude AEGON's revaluation reserve.
Included in other non-operating income/(charges) are charges made to policyholders with
9) respect to income tax.
There is an equal and opposite tax charge which is reported in the line Income tax
attributable to policyholder return.
Includes production on investment contracts without a discretionary participation feature
10) of which the proceeds are
not recognized as revenues but are directly added to our investment contract liabilities.
11) APE = recurring premium + 1/10 single premium.
12) PVNBP: Present Value New Business Premium.
Appendix III Condensed consolidated interim financial statements
CONDENSED CONSOLIDATED
BALANCE SHEET
At Mar. At Dec.
31 31
2009 2008 %
EUR millions
Investments general account 133,130 130,481 2
Investments for account of policyholders 103,312 105,400 (2)
Investments in associates 584 595 (2)
Deferred expenses and rebates 13,104 12,794 2
Other assets and receivables 26,618 27,766 (4)
Cash and cash equivalents 6,274 10,223 (39)
Total assets 283,022 287,259 (1)
Shareholders' equity 4,899 6,055 (19)
Convertible core capital securities 3,000 3,000 0
Other equity instruments 4,700 4,699 0
Minority interest 7 6 17
Group equity 12,606 13,760 (8)
Insurance contracts general account 101,575 97,377 4
Insurance contracts for account of
policyholders 59,635 60,808 (2)
Investment contracts general account 35,390 36,231 (2)
Investment contracts for account of
policyholders 44,386 45,614 (3)
Other liabilities 29,430 33,469 (12)
Total equity and liabilities 283,022 287,259 (1)
CAPITAL BASE
Group equity 12,606 # 13,760 (8)
Trust pass-through securities 154 161 (4)
Subordinated borrowings 8 41 (80)
Senior debt related to insurance
activities 328 69 N.M.
Total capital base 13,096 14,031 (7)
CONDENSED CONSOLIDATED INCOME STATEMENT
Q1 Q1
EUR millions (except per share data) Notes 2009 2008 %
Premium income 5,990 6,315 (5)
Investment income 2,250 2,422 (7)
Fee and commission income 400 434 (8)
Other revenues 1 1 0
Total revenues 8,641 9,172 (6)
Income from reinsurance ceded 461 335 38
Results from financial transactions (7,254) (8,900) 18
Other income 2 0 N.M.
Total income 1,850 607 N.M.
Benefits and expenses 1,756 270 N.M.
Impairment charges 430 34 N.M.
Interest charges and related fees 120 95 26
Other charges 1 0 N.M.
Total charges 2,307 399 N.M.
Share in net results of associates 2 9 (78)
Income before tax (455) 217 N.M.
Income tax 282 (64) N.M.
Net income attributable to equity
holders of AEGON N.V. (173) 153 N.M.
Net income per common share
Basic earnings per share (0.15) 0.07 N.M.
Dilluted earnings per share (0.15) 0.07 N.M.
CONDENSED CONSOLIDATED
STATEMENT OF COMPREHENSIVE At Mar. At Mar. At Dec.
INCOME 31 31 31
2009 2008 2008
EUR millions
Net income (173) 153 (1,082)
Other comprehensive income:
Movements in foreign currency translations
reserve 455 (1,066) (170)
Movements in revaluation reserves (1,373) (1,510) (6,651)
Other comprehensive income for the period (918) (2,576) (6,821)
Total comprehensive income attributable to
shareholders of AEGON N.V. (1,091) (2,423) (7,903)
CONDENSED CONSOLIDATED
STATEMENT OF CHANGES IN EQUITY
Shareholders' equity at January 1 6,055 15,151 15,151
Total comprehensive income attributable to
shareholders of AEGON N.V. (1,091) (2,423) (7,903)
Dividends paid on ordinary shares 0 0 (548)
Preferred dividend 0 0 (112)
Repurchased and sold own shares 4 (73) (217)
Coupons on perpetuals (net of tax) (48) (46) (189)
Coupons on convertible core capital securities 0 0 (121)
Other changes (21) (12) (6)
Shareholders' equity at end of period 4,899 12,597 6,055
CONDENSED CONSOLIDATED
CASH FLOW STATEMENT
Q1 Q1
EUR millions Notes 2009 2008 %
Cash flow from operating activities (4,127) 1,615 N.M.
Cash flow from investing activities
Purchase and disposal of intangible assets (1) (1) 0
Purchase and disposal of equipment
and other assets (15) (11) (36)
Purchase, disposal and dividends of
subsidiaries and associates (8) (6) (33)
(24) (18) (33)
Cash flow from financing activities
Issuance and purchase of share
capital 4 (73) N.M.
Issuance, repayment and coupons
of perpetuals (64) (62) (3)
Issuance, repayment and finance
interest on borrowings 628 810 (22)
568 675 (16)
Net increase/(decrease) in cash
and cash equivalents (3,583) 2,272 N.M.
AMOUNTS PER COMMON SHARE
Q1 Q1
Notes 2009 2008 %
Net income in EUR 1 (0.15) 0.07 N.M.
Net income fully diluted in EUR 1 (0.15) 0.07 N.M.
Net income in USD (0.20) 0.10 N.M.
Net income fully diluted in USD (0.20) 0.10 N.M.
Net underlying earnings in EUR 1 (0.04) 0.30 N.M.
Net underlying earnings fully diluted in EUR 1 (0.04) 0.30 N.M.
Net underlying earnings in USD (0.05) 0.45 N.M.
Net underlying earnings fully diluted in USD (0.05) 0.45 N.M.
Net operating earnings in EUR 1 (0.14) 0.09 N.M.
Net operating earnings fully diluted in EUR 1 (0.14) 0.09 N.M.
Net operating earnings in USD (0.18) 0.13 N.M.
Net operating earnings fully diluted in USD (0.18) 0.13 N.M.
At At
Mar. 31 Dec. 31
2009 2008
Shareholders' equity in EUR 2 1.84 2.60 (29)
Shareholders' equity in USD 2 2.45 3.62 (32)
NET INCOME PER COMMON SHARE
CALCULATION
Q1 Q1
EUR millions (except per share data) Notes 2009 2008 %
Net income (173) 153 N.M.
Coupons on perpetuals (48) (46) (4)
Net income / (loss) attributable to
ordinary shareholders (221) 107 N.M.
Weighted average number of common
shares outstanding 1,516 1,499 1
Net income per share (0.15) 0.07 N.M.
Quarterly net income per common
share
first quarter (0.15) 0.07 N.M.
second quarter 0.08
third quarter (0.25)
fourth quarter (0.82)
SEGMENT REPORTING (quarter- to-date information)
The Holding
Nether- United Other and other
Americas lands Kingdom countries activities Total
Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1
EUR millions 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008
Underlying earnings
before tax
geographically for
reportable segments (60) 499 76 130 7 45 32 40 (77) (56) (22) 658
Inter-segment
elimination (8) (21) (4) (17) 0 0 (2) (1) 14 39 0 0
Underlying
earnings before
tax
geographically
for reportable
segments (68) 478 72 113 7 45 30 39 (63) (17) (22) 658
Over/(under)
performance of
fair value items (32) (374) (190) (154) (3) 0 1 0 27 87 (197) (441)
Total operating
earnings before
tax (100) 104 (118) (41) 4 45 31 39 (36) 70 (219) 217
Gains/(losses)
on investments 28 (47) 110 76 10 3 4 0 21 54 173 86
Impairment
charges (286) (19) (78) (17) (14) 0 (5) (1) (5) 0 (388) (37)
Impairment
reversals 2 5 0 0 0 0 0 0 0 0 2 5
Other income/
(charges) 1 0 0 0 (24) (54) 0 0 0 0 (23) (54)
Income before
tax (355) 43 (86) 18 (24) (6) 30 38 (20) 124 (455) 217
Income tax 222 (69) 45 1 30 47 (21) (10) 6 (33) 282 (64)
Net income (133) (26) (41) 19 6 41 9 28 (14) 91 (173) 153
Revenues
Life insurance
gross premiums 1,499 1,474 1,568 1,458 1,820 2,258 340 383 0 0 5,227 5,573
Accident and
health insurance 453 422 106 118 0 0 29 29 0 0 588 569
General insurance 0 0 138 134 0 0 37 39 0 0 175 173
Total gross
premiums 1,952 1,896 1,812 1,710 1,820 2,258 406 451 0 0 5,990 6,315
Investment
income 1,142 1,202 502 547 517 596 77 61 70 60 2,308 2,466
Fee and
commission
income 222 242 106 111 44 60 28 21 0 0 400 434
Other revenues 0 1 0 0 0 0 1 0 0 0 1 1
Total revenues
for reportable
segments 3,316 3,341 2,420 2,368 2,381 2,914 512 533 70 60 8,699 9,216
Inter-segment
elimination 0 (1) (1) 1 (1) 0 0 0 (56) (44) (58) (44)
Total revenues 3,316 3,340 2,419 2,369 2,380 2,914 512 533 14 16 8,641 9,172
amounts in
million EUR
(unless
INVESTMENTS otherwise
GEOGRAPHICALLY stated)
United Holding &
Americas Kingdom The United Other other Total
USD GBP At March 31, 2009 Americas Netherlands Kingdom countries activities Eliminations EUR
Investments
1,412 36 Shares 1,061 785 39 161 47 (2) 2,091
77,611 5,111 Bonds 58,319 18,195 5,491 4,672 21 0 86,698
18,910 10 Loans 14,209 11,734 11 1,077 0 0 27,031
19,322 0 Other financial assets 14,519 117 0 120 0 0 14,756
679 0 Investments in real estate 510 2,044 0 0 0 0 2,554
Investments general
117,934 5,157 account 88,618 32,875 5,541 6,030 68 (2) 133,130 0 16,114 Shares 0 5,450 17,312 344 0 (5) 23,101
0 11,950 Bonds 0 12,896 12,838 278 0 0 26,012
Separate accounts and
55,791 2,327 investment funds 41,923 0 2,500 1,251 0 0 45,674
0 5,825 Other financial assets 0 1,011 6,258 212 0 0 7,481
0 972 Investments in real estate 0 0 1,044 0 0 0 1,044
Investments for account of
55,791 37,188 policyholders 41,923 19,357 39,952 2,085 0 (5) 103,312
Investments on balance
173,725 42,345 sheet 130,541 52,232 45,493 8,115 68 (7) 236,442
Off balance sheet
investments
105,674 1,863 third parties 79,407 11,195 2,001 5,235 0 0 97,838
Total revenue generating
279,399 44,208 investments 209,948 63,427 47,494 13,350 68 (7) 334,280
Investments
92,655 5,055 Available-for-sale 69,623 18,783 5,431 2,447 68 0 96,352
18,910 10 Loans 14,209 11,734 11 1,077 0 0 27,031
0 0 Held-to-maturity 0 0 0 2,278 0 0 2,278
Financial assets at
fair value through
61,481 36,308 profit or loss 46,199 19,671 39,007 2,313 0 (7) 107,183
679 972 Investments in real estate 510 2,044 1,044 0 0 0 3,598
Total investments
on balance
173,725 42,345 sheet 130,541 52,232 45,493 8,115 68 (7) 236,442
Elimination of treasury
(2) 0 shares * (2) (5) 0 0 0 7 0
Investments in
24 13 associates 18 60 13 490 5 (2) 584
35,144 6,723 Other assets 26,408 7,651 7,224 1,728 14,870 (11,494) 46,387
Consolidated
208,891 49,081 total Assets 156,965 59,938 52,730 10,333 14,943 (11,496) 283,413
* Due to the split by country unit on this line, it is necessary to reverse
the elimination of treasury shares in the column eliminations, as elimination
by type had already taken place in the column eliminations above as well.
amounts in
million EUR
(unless
INVESTMENTS otherwise
GEOGRAPHICALLY stated)
United Holding &
Americas Kingdom The United Other other Total
USD GBP At December 31, 2008 Americas Netherlands Kingdom countries activities Eliminations EUR
Investments
1,436 39 Shares 1,031 1,297 41 183 52 (2) 2,602
83,846 4,915 Bonds 60,247 18,298 5,161 4,827 20 0 88,553
19,194 10 Loans 13,792 10,416 10 1,116 0 0 25,334
15,635 0 Other financial assets 11,235 112 0 117 0 0 11,464
679 0 Investments in real estate 488 2,040 0 0 0 0 2,528
Investments general
120,790 4,964 account 86,793 32,163 5,212 6,243 72 (2) 130,481
0 17,360 Shares 0 6,416 18,225 167 0 (9) 24,799
0 12,675 Bonds 0 11,675 13,307 330 0 0 25,312
Separate accounts and
58,943 2,381 investment funds 42,353 0 2,500 1,420 0 0 46,273
0 6,376 Other financial assets 0 1,042 6,693 150 0 0 7,885
0 1,077 Investments in real estate 0 0 1,131 0 0 0 1,131
Investments for account
58,943 39,869 of policyholders 42,353 19,133 41,856 2,067 0 (9) 105,400
Investments on balance
179,733 44,833 sheet 129,146 51,296 47,068 8,310 72 (11) 235,881
Off balance sheet
investments
106,434 2,289 third parties 76,478 11,783 2,403 5,299 0 0 95,963
Total revenue generating
286,167 47,122 investments 205,624 63,079 49,471 13,609 72 (11) 331,844
Investments
94,444 4,859 Available-for-sale 67,862 19,110 5,101 2,602 72 0 94,747
19,194 10 Loans 13,792 10,416 10 1,116 0 0 25,334
0 0 Held-to-maturity 0 0 0 2,269 0 0 2,269
Financial assets at
fair value through
65,416 38,887 profit or loss 47,004 19,730 40,826 2,323 0 (11) 109,872
679 1,077 Investments in real estate 488 2,040 1,131 0 0 0 3,659
Total investments on
179,733 44,833 balance sheet 129,146 51,296 47,068 8,310 72 (11) 235,881
Elimination of treasury
(3) 0 shares * (2) (9) 0 0 0 11 0
Investments in
30 13 associates 21 55 13 503 4 (2) 594
36,798 7,192 Other assets 26,442 12,469 7,552 1,660 17,395 (14,734) 50,784
Consolidated
216,558 52,038 total Assets 155,607 63,811 54,633 10,473 17,471 (14,736) 287,259
* Due to the split by country unit on this line, it is necessary to reverse
the elimination of treasury shares in the column eliminations, as elimination
by type had already taken place in the column eliminations above as well.
ASSETS AND CAPITAL GEOGRAPHICALLY
amounts in
million EUR
(unless
otherwise
stated)
United
Americas Kingdom The United Other Total
Nether-
USD GBP Americas lands Kingdom countries EUR
At March 31, 2009
208,891 49,081 Assets business units 156,965 59,938 52,730 10,333 279,966
Other assets 3,056
Total assets on
balance sheet 283,022
10,228 1,132 Capital in units 7,686 2,351 1,216 1,802 13,055
Total capital base 13,096
Other net liabilities (41)
Total 13,055
At December 31, 2008
216,558 52,038 Assets business units 155,607 63,811 54,633 10,473 284,524
Other assets 2,735
Total assets on
balance sheet 287,259
10,617 1,257 Capital in units 7,629 2,954 1,320 1,948 13,851
Total capital base 14,031
Other net liabilities (180)
Total 13,851
Currencies
Income statement items: average rate 1 EUR = USD 1.3023 (2008: USD 1.4989).
Income statement items: average rate 1 EUR = GBP 0.9070 (2008: GBP 0.7569).
Balance sheet items: closing rate 1 EUR = USD 1.3308 (2008: USD 1.5812; year-end 2008: USD 1.3917).
Balance sheet items: closing rate 1 EUR = GBP 0.9308 (2008: GBP 0.7958; year-end 2008: GBP 0.9525).
Notes:
1) After deduction of preferred dividend and coupons on perpetuals.
Shareholders' equity per share is calculated after deduction of the preferred share
2) capital of EUR 2.1 billion (at Dec. 31, 2008:
EUR 2.1 billion) and considering the number of treasury shares. The number of common
shares used in the calculation of
shareholders' equity per share is 1,516 million (at Dec. 31, 2008: 1,515 million).
Notes to condensed consolidated interim financial statements
Basis of preparation and significant accounting policies
The condensed consolidated interim financial statements as at and for the 3
month period ended March 31, 2009, included in Appendix III have been prepared
in accordance with IAS 34 `Interim financial reporting'. It does not include
all of the information required for full financial statements and should
therefore be read together with the 2008 consolidated financial statements of
AEGON N.V. as included in AEGON's Annual Report for 2008.
The condensed consolidated interim financial statements included in Appendix
III have been prepared in accordance with the historical cost convention as
modified by the revaluation of investment properties and those financial
instruments (including derivatives) and financial liabilities that have been
measured at fair value.
The published figures in these condensed consolidated interim financial
statements are unaudited.
All accounting policies and methods of computation applied in the condensed
consolidated interim financial statements are the same as those applied in the
2008 consolidated financial statements, which were prepared in accordance with
the International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board and adopted by the European Union,
except for the changes highlighted below.
The following new standards and amendments to standards are mandatory for the
first time for the financial year beginning January 1, 2009:
IFRS 8 `Operating segments'. This standard requires disclosure of information
about the Group's operating segments and replaces the requirement to determine
primary (geographical) and secondary (business) reporting segments of the
Group.
Under IFRS 8, AEGON's operating segments are based on the businesses as
presented in internal reports that are regularly reviewed by the executive
board which is regarded as the "chief executive decision maker". The operating
segments are:
- AEGON Americas. Main business lines include life and protection, individual
savings and retirement, pensions and asset management, institutional products
and life reinsurance.
- AEGON The Netherlands. Main business lines include life and protection,
individual savings and retirement, pensions and asset management, distribution
and general insurance.
- AEGON United Kingdom. Main business lines include life and protection,
pensions and asset management and distribution.
- Other countries. Other countries include the country units Central and
Eastern Europe, other European countries, European variable annuities and
Asia. Main business lines include life and protection, pensions and asset
management and general insurance.
- Holding and other activities. Includes finance, employee and other
administrative expenses of the group staff functions.
This report includes a non-IFRS financial measure: Underlying earnings before
tax. AEGON believes this non-IFRS measure, together with the IFRS measure (Net
income), provides a meaningful measure for the investing public to evaluate
AEGON's business relative to the businesses of our peers. In addition,
underlying earnings is a key performance indicator on which the executive
board manages AEGON's performance. The reconciliation of this measure to the
most comparable IFRS measure is shown in table Segment reporting on page 34.
The adoption of IFRS 8 did not have any impact on equity or net income. In
accordance with the transitional requirements of the standard, AEGON has
provided full comparative information.
IAS 1 (revised) `Presentation of financial statements'. The revised standard
separates owner and non-owner changes in equity. The statement of changes in
equity includes only details of transactions with owners, with non-owner
changes in equity presented as a single line. In addition, the standard
introduces the statement of comprehensive income: it presents all items of
recognized income and expenses, either in one single statement, or in two
linked statements. AEGON has elected to present two statements. The adoption
of this standard did not have any impact on equity or net income. In
accordance with the transitional requirements of the standard, AEGON has
provided full comparative information.
IFRS 2 `Share-based Payment - Vesting Conditions and Cancellations'. The
Standard has been amended to clarify the definition of vesting conditions and
to prescribe the accounting treatment of an award that is effectively
cancelled because a non-vesting condition is not satisfied. The adoption of
this amendment did not have any impact on the financial position or
performance of the Group.
IAS 23 `Borrowing Costs (revised)'.
The standard has been revised to require capitalization of borrowing costs on
qualifying assets. This amendment is not relevant to the Group as the Group
already has a policy to capitalize borrowing costs.
In addition, the following new standards, amendments to existing standards and
interpretations are mandatory for the first time for the financial year
beginning January 1, 2009 but are not currently relevant for the Group:
- IFRIC 16 `Hedges of a net investment in a foreign operation';
- Amendments to IAS 39 `Eligible hedged items';
- Improvements to IFRS (2008).
Condensed consolidated income statement
The result from financial transactions in Q1 2009 amounted to a loss of EUR
7.3 billion compared to a loss of EUR 8.9 billion in Q1 2008. These losses
primarily reflect losses on investments for account of policyholders. This
decrease of losses is offset by an increase in the benefits and expenses line
which increases from an amount of EUR 270 million in Q1 2008 to EUR 1.8
billion in Q1 2009.
Capital and funding
The capital management section, on page 2 provides information on issuances,
repurchases and repayments of debt and equity securities during the current
interim reporting period.
Investment impairments
Page 6 of the results release includes information on net impairments
recognized in Q1 of 2009.
Fair value measurement
Fair value measurement of financial assets and liabilities has been subject of
industry-wide discussions between preparers, regulators and users of financial
statements. The distressed markets continuing since the second half of 2008
resulted in challenges related to the fair value measurement of financial
instruments because of far less liquidity in the market, forced sales
resulting from deleveraging activities and asset/liability programs. Assets
with a mark-to-model valuation are now 3.8% (EUR 3.7 billion) of the total
valuation of debt instruments held at fair value (Q4 2008: 1.1%).
Business combinations
There were no significant new business combinations during Q1 2009.
Commitments and contingencies
There have been no material changes in contingent assets and liabilities
reported in the 2008 consolidated financial statements of AEGON.
Events after the balance sheet date
On April 22, 2009 AEGON announced it has agreed to sell its Taiwanese life
insurance business to Zhongwei Company Ltd. The sale price is expected to be
EUR 65 million resulting in an estimated total negative impact on earnings of
EUR 400 million in Q2 2009, resulting in a charge to shareholders' equity of
EUR 300 million. The sale of the Taiwanese life insurance business is subject
to regulatory approval and is expected to close by the end of Q3 2009.
On April 29, 2009 AEGON completed an issue of senior unsecured notes with a
nominal value of EUR 1 billion due April 29, 2012, under its USD 6 billion
program for the issuance of debt instruments. The notes, issued at a price of
99.673, will carry a coupon of 7%.
About AEGON
As an international life insurance, pension and investment company based in
The Hague, AEGON has businesses in over twenty markets in the Americas, Europe
and Asia. AEGON companies employ just over 31,000 people and have over 40
million customers across the globe.
Key figures First quarter Full year 2008
2009
Underlying earnings EUR (22)
before tax million EUR 1.57 billion
New life sales EUR 543 EUR 2.63 billion
million
Gross deposits EUR 8.2 EUR 40.75 billion
billion
Revenue generating EUR 334 EUR 332 billion
investments billion
(End of period)
Group Corporate Communications & Investor Relations
Media relations Media conference call
Phone: + 31 (0)70 - 344 8956 8:00 am CET
E-mail: gcc-ir@aegon.com Audio webcast on www.aeegon.com
Investor relations Analyst & investor call
Phone: + 31 (0)70 - 344 8305 3:00 pm CET
or 877 548 9668 - toll free USA only Audio webcast on www.aegon.com
E-mail: ir@aegon.com Call-in numbers (listen only):
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Website: www.aegon.com
Financial supplement:
AEGON's Q1 2009 Financial supplement is available on www.aegon.com.
Video interview Alex Wynaendts
Available on www.aegon.com at 7.45 a.m., via the link
http://www.aegon.com/q1interview.
Disclaimers
Cautionary note regarding non-GAAP measures
This press release includes certain non-GAAP financial measures: (net)
underlying earnings, net operating earnings, operating earnings before tax and
value of new business. The reconciliation of net underlying earnings and
underlying earnings before tax to the most comparable IFRS measures is
provided on page 34. A reconciliation of (net) underlying earnings to
operating earnings before tax is provided on page 27.
Value of new business is not based on IFRS, which are used to report AEGON's
quarterly condensed consolidated interim financial statements and should not
be viewed as a substitute for IFRS financial measures.
AEGON believes that these non-GAAP measures, together with the IFRS
information, provide a meaningful measure for the investment community to
evaluate AEGON's business relative to the businesses of our peers.
Local currencies and constant currency exchange rates
This press release contains certain information about our results and
financial condition in USD for the Americas and GBP for the United Kingdom,
because those businesses operate and are managed primarily in those
currencies. Certain comparative information presented on a constant currency
basis eliminates the effects of changes in currency exchange rates. None of
this information is a substitute for or superior to financial information
about us presented in EUR, which is the currency of our primary financial
statements.
Forward-looking statements
The statements contained in this press release that are not historical facts
are forward-looking statements as defined in the US Private Securities
Litigation Reform Act of 1995. The following are words that identify such
forward-looking statements: believe, estimate, target, intend, may, expect,
anticipate, predict, project, counting on, plan, continue, want, forecast,
should, would, is confident, will, and similar expressions as they relate to
our company. These statements are not guarantees of future performance and
involve risks, uncertainties and assumptions that are difficult to predict. We
undertake no obligation to publicly update or revise any forward-looking
statements. Readers are cautioned not to place undue reliance on these
forward-looking statements, which merely reflect company expectations at the
time of writing. Actual results may differ materially from expectations
conveyed in forward-looking statements due to changes caused by various risks
and uncertainties. Such risks and uncertainties include but are not limited to
the following:
- Changes in general economic conditions, particularly in the United States,
the Netherlands and the United Kingdom;
- Changes in the performance of financial markets, including emerging markets,
such as with regard to:
- The frequency and severity of defaults by issuers in our fixed income
investment portfolios; and
- The effects of corporate bankruptcies and/or accounting restatements on the
financial markets and the resulting decline in the value of equity and debt
securities we hold;
- The frequency and severity of insured loss events;
- Changes affecting mortality, morbidity and other factors that may impact the
profitability of our insurance products;
- Changes affecting interest rate levels and continuing low or rapidly
changing interest rate levels;
- Changes affecting currency exchange rates, in particular the EUR/USD and
EUR/GBP exchange rates;
- Increasing levels of competition in the United States, the Netherlands, the
United Kingdom and emerging markets;
- Changes in laws and regulations, particularly those affecting our
operations, the products we sell, and the attractiveness of certain products
to our consumers;
- Regulatory changes relating to the insurance industry in the jurisdictions
in which we operate;
- Acts of God, acts of terrorism, acts of war and pandemics;
- Changes in the policies of central banks and/or governments;
- Litigation or regulatory action that could require us to pay significant
damages or change the way we do business;
- Customer responsiveness to both new products and distribution channels;
- Competitive, legal, regulatory, or tax changes that affect the distribution
cost of or demand for our products;
- Our failure to achieve anticipated levels of earnings or operational
efficiencies as well as other cost saving initiatives; and
- The impact our adoption of the International Financial Reporting Standards
may have on our reported financial results and financial condition.
Further details of potential risks and uncertainties affecting the company are
described in the company's filings with Euronext Amsterdam and the US
Securities and Exchange Commission, including the Annual Report on Form 20-F.
These forward-looking statements speak only as of the date of this document.
Except as required by any applicable law or regulation, the company expressly
disclaims any obligation or undertaking to release publicly any updates or
revisions to any forward-looking statements contained herein to reflect any
change in the company's expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is based.
END
Copyright (C) 2009 PR Newswire Europe. All rights reserved
News Provided by COMTEX
Company: Aegon N.V. (AEG)
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