Presentation for Aegon's 2014 AGM on 21 May 2014, including strategic review, update on progress towards financial targets and voting items. For full details of this Annual General Meeting of Shareholders and upcoming meetings visit http://www.aegon.com/agm
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2014 Annual General Meeting (AGM) Presentation
1. The Hague, May 21, 2014
Annual General Meeting of Shareholders Aegon N.V.
Jaarlijkse Algemene Vergadering van Aandeelhouders Aegon N.V.
2. 2
Welcome to the Annual General Meeting of Shareholders
Welkom op de jaarlijkse Algemene Vergadering
van Aandeelhouders
In order to hear a simultaneous translation into English,
please choose channel 2
Voor het beluisteren van een simultaanvertaling in het
Nederlands kiest u kanaal 1
7. 7
Focus on executing our strategy is delivering clear results
2013
Strong performance
ï§ Higher underlying earnings
ï§ Strong capital position and ratings
ï§ Increased dividend
Executing on strategic
transformation
ï§ Getting closer to our customers
ï§ Expanded digital capabilities
ï§ Enhanced distribution
8. 8
AA-
financial
strength rating
EUR
1.9
billion
Strong underlying
earnings before tax
0
140
340
2011 2012 2013
More cash allocated
to dividends
(EUR millions)
Strong excess
capital position
EUR
2.2
billion
Solvency ratio: 212%
All numbers on this slide refer to full year 2013 or end-year 2013 data
9. 9
Aegonâs purpose is to help people take responsibility for their financial futureâŠ
âŠacross their life cycleâŠ
10. 10
Building trust and creating benefitsin 2013âŠ
Paid out ⏠20 billion
in claims and
benefits to our
customersâŠ
Impact investments
of
⏠3 billion
Invested ⏠6.3 million
in local communities
around the world
11. 11
Global trends supportAegonâs businesses
Aging leads to significant demand for our products globally
Source: Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat
68.6
79.6
51
75.1
71.9
81.7
44.6
76
69.4
83.1
1950
2015
Life expectancy at birth in 1950 and in 2015
(in years; overall: male + female)
13. 13
Optimize portfolio
Successful repositioning of Spanish business
* Depending on the performance of the partnership, after 5 years an additional amount may be paid
Divestiture of existing joint ventures Strategic partnership with Spainâs
largest financial group
Spanish divestments generated
over EUR 1 billion
Continued partnership with Liberbank
14. 14
Operational excellence
Disciplined focus on cost efficiency supports strategic investments
Cost reductions allow for increased investments without materially increasing total expenses
Cost reduction programs
ï§ Consolidation from 13 to 3 divisions in
the Americas
ï§ Shared service center in the Americas for
additional efficiencies
ï§ Completed two-year cost reduction
program in NL
ï§ Extensive transformation program in UK
ï§ Restructuring and deleveraging at holding
Strategic investments to respond to our
customersâ changing needs
ï§ Technology continues to change customer
behavior
ï§ Committed to providing products and
services customers need
ï§ Customers seek different distribution
channels
âș New online channels to engage customers
âș Redesignedintermediary capability
20. 20
Sustainability is at the heart of our strategy
Capital Talent Expertise Trust Benefits Profits Society
ïź Pricing and product development policy puts customer first
ïź Dow Jones Sustainability Index (DJSI) performance confirms our actions
âș Aegon ranked Silver Class in the DJSI â just behind the sector leader
ïź Various key policies established
âș Volunteer hours for employees
âș Sustainable procurement policy
âș Health and safety statement
25. 25
Aegon performed strongly in 2013
1,544
1,851 1,945
2011 2012 2013
887
1,582
849
2011 2012 2013
2011 2012 2013
3,420 3,177 3,328
2011 2012 2013
* Total sales consist of new life sales, newpremiums accident & health, general insurance and 1/10 of gross deposits
Underlyingearnings before tax
(As reported; EUR million)
ïź ïź Sales ïź MCVNB
Net income
(EUR million)
Operating expenses
(EUR million)
Sales*and MCVNB
(As reported; EUR million)
5,701
6,725 7,151
422
986
ïź Adjusted expense levels
26. 26
ï§ Earnings up 5%
âș Continued business growth
âș Higher equity markets
âș Partly offset by weaker US dollar
ï§ Lower net income
âș Positive:
âą Higher gains on investments
âą Lower impairments
âą Lower tax charges
âș Negative:
âą Losseson equity hedges â in place
to protectcapital position
âą Lossesdue to adjustments in
market assumptions
Increased underlying earnings not reflected in net income due to hedging costs
1,544
1,851 1,945
2011 2012 2013
887
1,582
849
2011 2012 2013
Underlyingearnings before tax
(As reported; EUR million)
Net income
(EUR million)
27. 27
Strong capital position and cash flows
1.2
1.6
1.3
2011 2012 2013
6.7 7.4 7.4
2011 2012 2013
1.2
2.0 2.2
2011 2012 2013
195%
228% 212%
2011 2012 2013
Operationalfree cash flows
(Excl. market impacts; EUR million)
Return on equity
Solvency ratio
(Insurance Group Directive, IGD)
Excesscapitalat the holding
(EUR billion)
28. 28
Local balance sheets well capitalized
Target
Buffer US UKNL
Floor
ï§ New capital management framework
implemented in 2013
ï§ US and the Netherlands strongly
capitalized and paying dividends
to the holding
ï§ UK capital position significantly
improved after GBP 300 million
contribution from the holding
Capitallevels
(End of 2013)
29. 29
ï§ 2013 operational free cash flows in target range of EUR 1.3 - 1.6 billion
ï§ Operational free cash flows paid out as dividend to the holding
ï§ Americas and the Netherlands expected to remain stable; UK cash flows to increase
ï§ New Markets contributing to increasing operational free cash flow going forward
Operational free cash flows: dividends to holding & strengthening of local capital
2013
Americas 0.8
Netherlands 0.3
United Kingdom 0.1
New Markets 0.1
Total normalized operational free cash flow 1.3
Market impacts & one-time items 0.2
Operational free cash flow 1.5
2013
Americas 0.9
Netherlands 0.5
United Kingdom 0.0
New Markets 0.1
Dividend paid by units 1.5
Strong cash flowsat the unitsâŠ
(EUR billion)
âŠtranslateinto dividendsto the holding
(EUR billion)
30. 30
How excess capital was put to use
Excesscapitalin 2013
(EUR billion)
2.0 1.5 0.6 (0.5) (0.4) (0.4) (0.4) 2.2
Excess capital
January 1, 2013
Net dividends
received from
business units
Acquisitions &
divestments
Investments in
business units
Common &
preferred
dividends
Cancellation of
preferred
shares
Funding &
operating
expenses
Excess capital
December 31,
2013
31. 31
ï§ Capital management results in
âș Lower funding costs
âș Improving cash flows
âș Increasing return on equity
ï§ Leverage ratio and fixed charge coverage on track to reach 2014 objectives
Active capital managementimproves financial flexibility
8.7
~6.8
34.4%
~30.0%
Q1 13 Q4 13 Q1 14 2014 target
* Interest expense on financialleverage and preferred dividends; 2013 restated to reflected earnings impact of DAC and longevity accounting changes
** Gross leverage ratio reflects shareholdersâequity adjusted for DAC and longevity accounting changes
520
~300
3.4x
6-8x
2011 2012 2013 2014 target
Lower fundingcosts*
(EUR million, fixed charge coverage)
Improved gross leverage**
(EUR billion, %)
32. 32
0
0.10*
0.21
0.22
2010 2011 2012 2013
ï§ Proposed final 2013 dividend of EUR 0.11 per share, total 2013 dividend of EUR 0.22 per share
ï§ Continue to offer our investors a choice between cash and shares, with stated intention to
neutralize any share dilution
ï§ Future dividend growth dependent on strong capital position and cash flows
Payment of growing and sustainabledividend
0 0
140
340
460**
2010 2011 2012 2013 2014E
* Final 2011 dividend of EUR 0.10 per share
** Assumes 2014 interim dividend maintained at EUR 0.11 per share
+ 5%
Dividends per share
(EUR per share)
More cashallocated to dividends
(EUR per share)
33. 33
ï§ Underlying earnings up on higher account balances and lower financing costs at the holding
ï§ Higher sales driven by deposit growth and strong accident & health sales in the US
ï§ Active capital management further drives down cost of leverage, supports improving RoE
ï§ Strong cash flows contributing to solid capital position
Positive momentum continued in first quarter of 2014
* Operational free cash flowexcluding market impact and one-time items
⏠498m
+7% vs Q1 13
8.4%
9.1% excluding
run-off capital
⏠2.1bn
+20% vs Q1 13
⏠305m
Q1 13
⏠223m
(4)% vs Q1 13
37%
+4% vs Q1 13
Earnings RoESales Cash flow*MCVNBFee
⏠498m
+7% vs Q1 13
8.4%
9.1% excluding
run-off business
⏠2.1bn
+20% vs Q1 13
⏠305m
-7% vs Q1 13
⏠223m
-4% vs Q1 13
37%
+4 pp Q1 13
Earnings RoESales Cash flow*MCVNBFee
34. 34
Progress towards 2015 targets
* Excluding market impact and one-time items
⏠498m
Underlying earnings
+7% vs Q1 13
⏠498m
Underlying earnings
+7% vs Q1 13
⏠498m
Underlying earnings
+7% vs Q1 13
⏠498m
Underlying earnings
+7% vs Q1 13
30-35%
Fee-based earnings as % of
underlying earnings by 2015
⏠1.3-1.6
billion
Annual operational free cash
flow* by 2015
7-10%
Grow underlying earnings
before tax on average per
annum between 2012 and 2015
10-12%
Return on equity by 2015
37%
Q1 2014
⏠305
million
Q1 2014
7%
Q1 2014 vs. Q1 2013
8.4%
Q1 2014 (9.1% excluding run-
off capital)
38. 38
ï§ Aegonâs Global Remuneration Framework applies throughoutAegon Group to:
âș Provide a consistent and integrated approach to remuneration
âș Ensure compliance with European and Dutch regulations for remuneration in financial
institutions
ï§ Executive Board Remuneration Policy adopted by the AGM on May 12, 2011
âș Executive Board policy already complied with DNB requirements, some refinements
were implemented
âș No further changes to Executive Board policy since then
Aegonâs remuneration policyâ Executive Board
39. 39
Variable compensation:
ï§ Based on successful achievement of performance indicators
ï§ Conditionally granted at the start of the performance year
ï§ Performance period = 1 year
ï§ Conditionally allocated (awarded) after completion of the performance year, depending on results
ï§ 50% of the allocation is in shares, 50% in cash
ï§ 40% of the allocation is paid out/vests in year following performance year
ï§ 60% of the allocation is deferred and is paid out/vests in the subsequent 3 years, subject to ex-
post assessments
ï§ After vesting, the variable compensation shares are subject to a holding period of 3 years
Executive Board remuneration â current outline
Fixed compensation (annual salary)
+
Variable compensation (maximum 100% of annual salary)
+
Benefits (e.g. pension)
40. 40
ï§ Remuneration in 2013
âș Fixed compensation: no change compared to 2012
âș Deferred variable compensation from previous years paid out/vested
(2010 : shares; 2011 : cash and shares)
âș Upfront Variable Compensation regarding performance year 2012 paid out/vested
(cash and shares)
âș 3 year holding periods apply to all vested shares
ï§ Conditional variable compensation allocated over 2013
âș 98,33% of fixed compensation for mr. Wynaendts - 98,50% of fixed compensation for mr. Button
âș 40% of the variable compensation related to 2013, is made available in cash and shares in 2014
âș The remaining part (60%) of conditional variable compensation over the performance year 2013
(both cash and shares) is to be paid out/vest in future years, subject to ex-post assessments
Executive Board remuneration â 2013
41. 41
Variable compensation measures are based on:
ï§ Financial and non-financial targets (75%)
âș Underlying earnings after tax (15%)
âș Return on equity (15%)
âș Market consistentvalue of new business (20%)
âș Return on economic required capital (10%)
âș Strategy/sustainability (15%):
â Aegonâs score on the Dow Jones Sustainability Index (7.5%)
â Employee engagement scores (7.5%)
ï§ Personal targets (25%)
âș Strategy execution â e.g. critical change initiatives like customercentricity
âș HR and Sustainability topicsâ e.g. talent development,successionplanning
âș Large projects/issues â e.g. balance sheet management,reorganizations
Executive Board remuneration â performance measures& results
100%
100%
93.3% A. Wynaendts
94% D. Button
Outcome 2013:
42. 42
ï§ Aegon operates globally, in diverse environments, markets, cultures
ï§ Opinions, perceptions and appreciation of variable compensation differ
ï§ Aegon strives for a balance between global consistency and local optimization
ï§ New/additional/updated legislation and regulations impact remuneration policies:
âș Dutch governmentproposes to cap variable compensationin financial sector
âș Regulations limit sign-on-, retention- and severance payments
âș Number of Identified Staff expectedto increase on the basis of new criteria
âș Crisis-tax over income above EUR 150,000continues
âș Fiscal treatment of pensionaccrual in the Netherlands to be limited per January 1, 2015
ï§ These changes will impact Aegonâs remuneration policies
âș In general, for all staff globally
âș In particular in the Netherlands
âș Including the remuneration for the Executive Board
Aegonâs remuneration policyin general â going forward
44. 44
Annual Accounts 2013: Proposal to
adopt the Annual Accounts for the year 2013
Jaarrekening 2013: Voorstel tot vaststelling
van de Jaarrekening 2013
Agenda item 3.3 / Agendapunt 3.3
45. 45
Prior to the voting:
â Insert card with chip facing you
â Name appears in display
During the voting:
â Voting options appear in display
â Press button:
1 = For
2 = Against
3 = Abstain
â Choice appears in display
â During voting you can change
your vote
â Last choice counts
Vóór de stemming:
â Plaats kaart met chip naar voren
â Naam verschijnt in venster
Tijdens de stemming:
â Stemkeuzes verschijnen in venster
â Maak uw keuze:
1 = Vóór
2 = Tegen
3 = Onthouding
â Keuze verschijnt in venster
â Tijdens stemming kunt u uw
keuze wijzigen
â Laatste keuze geldt
Voting procedure / Stemprocedure
46. 46
Annual Accounts 2013: Proposal to
adopt the Annual Accounts for the year 2013
Jaarrekening 2013: Voorstel tot vaststelling
van de Jaarrekening 2013
Vote on agenda item 3.3 / Stemming over agendapunt 3.3
47. 47
Proposal to approve the final dividend 2013
Voorstel tot goedkeuring van het slotdividend
over het boekjaar 2013
Agenda item 4 / Agendapunt 4
48. 48
ï§ Cash flows upstreamed to the holding are available to execute our
strategy, to fund operating expenses and to pay dividends to
shareholders
ï§ Aegon aims to pay a sustainable dividend to shareholders, which can
grow over time if performance of the company allows so
âș Balance prudence versus offering an attractive dividend
ï§ In normal circumstances,Aegon expects to declare an interim dividend
and to propose a final dividend for approval at the AGM
Aegonâs dividend policy
49. 49
ï§ Proposed final dividend for 2013:
EUR 0.11 per common share
âș Results in total dividend for 2013 of
EUR 0.22 per common share
ï§ To be paid in cash or stock
ï§ Value of stock dividend approximately
equal to cash dividend
Aegonâs dividend proposal
0.11
0.11
2012 2013
Dividend
(EUR)
0.21
0.22
ïź Final dividend ïź Interim dividend
50. 50
Proposal to approve the final dividend 2013
Voorstel tot goedkeuring van het slotdividend
over het boekjaar 2013
Agenda item 4 / Agendapunt 4
51. 51
Proposal to approve the final dividend 2013
Voorstel tot goedkeuring van het slotdividend
over het boekjaar 2013
Vote on agenda item 4 / Stemming over agendapunt 4
52. 52
Proposal to release the members of the
Executive Board from liability for their duties
Voorstel tot het verlenen van kwijting aan
de leden van de Raad van Bestuur
Agenda item 5 / Agendapunt 5
53. 53
Proposal to release the members of the
Executive Board from liability for their duties
Voorstel tot het verlenen van kwijting aan
de leden van de Raad van Bestuur
Vote on agenda item 5 / Stemming over agendapunt 5
54. 54
Proposal to release the members of the
Supervisory Board from liability for their duties
Voorstel tot het verlenen van kwijting aan
de leden van de Raad van Commissarissen
Agenda item 6 / Agendapunt 6
55. 55
Proposal to release the members of the
Supervisory Board from liability for their duties
Voorstel tot het verlenen van kwijting aan
de leden van de Raad van Commissarissen
Vote on agenda item 6 / Stemming over agendapunt 6
56. 56
Proposal to appoint Mr. Robert W. Dineen
to the Supervisory Board
Voorstel tot benoeming van
de heer Robert W. Dineen als
lid van de Raad van Commissarissen
Agenda item 7 / Agendapunt 7
57. 57
Age: 64
Nationality: American
Shares held in the company/Aantal aandelen in de
vennootschap:
â None
Former occupation/vroegere functie:
â Vice Chairman of Lincoln Financial Network
Memberships other boards/Andere bestuursfuncties
â None
Robert W. Dineen
58. 58
âI have always had the highest regard and
respect for Aegon, first as a partner during my
tenure at Merrill Lynch, and most recently as a
competitor while at Lincoln Financial Group.
I trust my many years of experience in the
financial services industry will bring great
value to the shareholders, customers,
employees and the management team of
Aegonâ.
Robert W. Dineen
59. 59
Proposal to appoint Mr. Robert W. Dineen
to the Supervisory Board
Voorstel tot benoeming van
de heer Robert W. Dineen als
lid van de Raad van Commissarissen
Agenda item 7 / Agendapunt 7
60. 60
Proposal to appoint Mr. Robert W. Dineen
to the Supervisory Board
Voorstel tot benoeming van
de heer Robert W. Dineen als
lid van de Raad van Commissarissen
Voting on agenda item 7 / Stemming over agendapunt 7
61. 61
Proposal to appoint Ms. Corien Wortmann-Kool
to the Supervisory Board
Voorstel tot benoeming van
mevrouw Corien Wortmann-Kool als
lid van de Raad van Commissarissen
Agenda item 8 / Agendapunt 8
62. 62
Age: 54
Nationality: Dutch
Shares held in the company/Aantal aandelen in de
vennootschap:
â None
Main occupation/huidige functie
â Resigning member of the European Parliament
Memberships other boards/Andere bestuursfuncties
â Member Supervisory Board Het Kadaster (NL, not listed)
â Member Supervisory Board Mercedes-Benz Netherlands
(NL, not listed)
Corien M. Wortmann-Kool
63. 63
âI look forward to helping Aegon achieve a
sustainable, innovative and profitable business
strategy that earns the trust of both customers
and society. I trust my national and international
experience in politics and public administration
â including extensive work in Europe â and my
knowledge of diverse stakeholder interests will
support Aegon in meeting the challenges of a
changing environmentâ.
Corien M. Wortmann-Kool
64. 64
Proposal to appoint Ms. Corien Wortmann-Kool
to the Supervisory Board
Voorstel tot benoeming van
mevrouw Corien Wortmann-Kool als
lid van de Raad van Commissarissen
Agenda item 8 / Agendapunt 8
65. 65
Proposal to appoint Ms. Corien Wortmann-Kool
to the Supervisory Board
Voorstel tot benoeming van
mevrouw Corien Wortmann-Kool als
lid van de Raad van Commissarissen
Voting on agenda item 8 / Stemming over agendapunt 8
66. 66
Proposal to authorize the Executive Board
to issue common shares
Voorstel tot machtiging van de Raad van Bestuur
tot uitgifte van gewone aandelen
Agenda item 9 / Agendapunt 9
67. 67
Proposal to authorize the Executive Board
to issue common shares
Voorstel tot machtiging van de Raad van Bestuur
tot uitgifte van gewone aandelen
Voting on agenda item 9 / Stemming over agendapunt 9
68. 68
Proposal to authorize the Executive Board
to restrict or exclude pre-emptive
rights upon issuing common shares
Voorstel tot machtiging van de Raad van Bestuur
tot beperking of uitsluiting van voorkeursrechten
bij de uitgifte van gewone aandelen
Agenda item 10 / Agendapunt 10
69. 69
Proposal to authorize the Executive Board
to restrict or exclude pre-emptive
rights upon issuing common shares
Voorstel tot machtiging van de Raad van Bestuur
tot beperking of uitsluiting van voorkeursrechten
bij de uitgifte van gewone aandelen
Voting on agenda item 10 / Stemming over agendapunt 10
70. 70
Proposal to authorize the Executive Board
to issue common shares under incentive plans
Voorstel tot machtiging van de Raad van Bestuur
tot uitgifte van gewone aandelen in het
kader van incentiveplannen
Agenda item 11 / Agendapunt11
71. 71
Proposal to authorize the Executive Board
to issue common shares under incentive plans
Voorstel tot machtiging van de Raad van Bestuur
tot uitgifte van gewone aandelen in het
kader van incentiveplannen
Voting on agenda item 11 / Stemming over agendapunt 11
72. 72
Proposal to authorize the Executive Board
to acquire shares in the company
Voorstel tot machtiging van de Raad van Bestuur
tot verkrijging van eigen aandelen
Agenda item 12 / Agendapunt 12
73. 73
Proposal to authorize the Executive Board
to acquire shares in the company
Voorstel tot machtiging van de Raad van Bestuur
tot verkrijging van eigen aandelen
Voting on agenda item 12 / Stemming over agendapunt 12