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AEGON Improves Underlying Earnings and Capital Position in Q2 2009
PR Newswire
Aug 12, 2009
THE HAGUE, The Netherlands, Aug. 13 /PRNewswire-FirstCall/ --
Capital Position Strengthened
- EUR 1.6 billion in capital freed up in first half 2009, above full year
target
- Excess capital(a) of EUR 3.5 billion by end June
- Revaluation reserves improve by EUR 3.4 billion, or 40%, a result of
narrowing credit spreads
- IGD(b) solvency ratio increases to 202%
- No interim dividend payment for 2009 - dividend policy remains
unchanged
Improved earnings
- Underlying earnings before tax of EUR 404 million, substantial
improvement compared with the past two quarters
- Underlying earnings include lower investment income as result of
de-risking measures
- Fair value items of EUR (31) million include EUR 202 million net gain
from higher equity markets, offset by a loss on interest rate hedges
- Net loss of EUR 161 million, including one-time EUR 385 million loss
from sale of Taiwanese life activities
- Impairments of EUR 393 million, approximately half from US housing
market related assets
- Cost savings well on track to achieve EUR 150 million target
Continued profitable sales, despite difficult environment
- New life sales of EUR 469 million, helped by an increase in US retail
sales
- Net deposits(c) of EUR 857 million, due to strong sales of annuities and
pensions, and improved persistency
- Value of new business of EUR 181 million, with overall increase in
rates of return
Statement Alex Wynaendts, CEO
"Ensuring that AEGON maintains a strong capital position continues to be front and center in our actions. In the first half of the year, we have exceeded our full-year capital release target. We are also pleased with the further improvement, quarter over quarter, to our underlying earnings, despite the impact of our de-risking measures on investment income. Our strong capital position has allowed us to begin reversing in part the impact of these measures by investing cash in higher yielding, quality assets. We have not declared an interim dividend, however our dividend policy remains unchanged. Our decision to pay a full-year dividend will continue to depend on cash flows and AEGON's capital position at the end of the year.
"We are well on track to achieve our cost savings target for 2009. At the
same time, we are working to identify additional cost saving measures with the
determination not to undermine the high level of service our customers have
come to expect. We are especially pleased by the continued confidence of our
customers, as demonstrated by solid retail sales in
"We remain convinced that our strategic objectives to strengthen AEGON's capital position, reduce costs and implement actions to safeguard customer trust are the right ones in the current environment and for the long term. AEGON has weathered the turmoil of the past year and is committed to being in a strong position to maximize the opportunities ahead."
KEY PERFORMANCE INDICATORS
Notes Q2 Q1 % Q2
amounts in EUR millions 2009 2009 2008
Underlying earnings before tax 1 404 (22) N.M. 596
Net income 2 (161) (173) 7 276
New life sales 3 469 543 (14) 729
Gross deposits excluding
Institutional Guaranteed
Products 4 5,647 6,393 (12) 5,650
Value of new business (VNB) 181 201 (10) 212
Return on equity 5 10.3% (3.3%) N.M. 11.2%
- TABLE CONTINUED -
% Ytd Ytd %
amounts in EUR millions 2009 2008
Underlying earnings
before tax (32) 382 1,254 (70)
Net income N.M. (334) 429 N.M.
New life sales (36) 1,012 1,415 (28)
Gross deposits excluding
Institutional Guaranteed
Products - 12,040 11,037 9
Value of new business (VNB) (15) 382 398 (4)
Return on equity (8) 3.5% 12.2% (71)
a) Excess capital over S&P AA capital adequacy requirements
b) The calculation of the IGD (Insurance Group Directive) capital surplus
and ratio are 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. The
methodology to calculate the ratio for the Netherlands has been
adjusted to include the excess value above the technical provisions,
calculated according to the local regulatory liability adequacy test,
as of Q2 2009. The comparable IGD ratio as per end of Q1 2009 would
have been 193%.
c) Excluding institutional guaranteed products
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 future growth:
- Focus on capital preservation and accelerate the capital release
program;
- EUR 150 million in cost saving measures for 2009;
- Develop contingency plans for possible deterioration in financial
markets.
AEGON further aims to reduce its earnings sensitivity to financial markets to realize more stable earnings.
Portfolio review
AEGON is continuing to review its portfolio of businesses to ensure they meet the criteria outlined in the company's strategy. Recent developments:
- Sale of life business in Taiwan, decreasing AEGON's long-term interest
rate exposure and substantially lowering required economic capital;
- Withdrawal from Group Risk market in the UK,
releasing EUR 55 million in capital over next three years.
Consistent with its strategy to allocate capital to businesses and
geographies that offer attractive growth and higher return prospects, AEGON
completed its acquisition of a 50% stake in Mongeral,
Cost measures
- Cost saving measures well on track to achieve the full-year EUR150
million target;
- Operating expenses down 5% in the first half of 2009, excluding impact
from restructuring charges, increased employee benefit plan expenses
and currency effects.
Capital preservation
- A total of EUR 1.6 billion in capital released from AEGON's businesses
in H1, above target of EUR 1.5 billion for full year;
- AEGON started to invest cash in higher yielding quality assets, which
will in part reverse earnings impact from de-risking measures;
- AEGON aims to maintain an amount of excess capital substantially above
AA capital adequacy requirements.
Capital management
Excess capital
- Excess capital at the end of June 2009 totaled EUR 3.5 billion over AA
capital adequacy requirements, up EUR 0.8 billion from the end of Q1
2009;
- The positive impact from improved capital markets, the company's
capital release program and statutory earnings were partly offset by
impairments and rating migration in the Americas. At the end of Q2
2009, AEGON had an IGD solvency ratio of 202%;
- Because of uncertain economic conditions, AEGON still expects an
elevated level of asset impairments in its investment portfolio in 2009
compared with its long-term assumptions. Impairments negatively
impacted the company's capital position in Q2 2009, reducing excess
capital by approximately EUR 0.3 billion. In addition, rating migration
in the Americas' asset portfolio was limited to a EUR 0.1 billion
increase in capital requirements.
IFRS core capital
- At the end of June 2009, core capital, excluding the revaluation
reserves, totaled EUR 15.8 billion, 75% of the total capital base, well
above AEGON's minimum target of 70%7,8). Core capital, including the
revaluation reserves, was EUR 10.6 billion, consisting of EUR 7.6
billion in shareholders' equity and a further EUR 3 billion in
convertible core capital securities. AEGON's revaluation reserves
improved by 40% during Q2 2009, or EUR 3.4 billion, to a negative EUR
5.1 billion.
The improved revaluation reserves were the main driver behind an increase in shareholders' equity. The revaluation reserves improved primarily due to the impact of narrowing credit spreads on bond values.
Dividend
- AEGON has not declared an interim dividend to common shareholders for
2009. The company's dividend policy, however, remains unchanged, i.e.
the payment of a dividend depends on the capital position and cash
flows of the company. A decision on a final dividend will be announced
with the Q4 2009 results.
Risk management
Equity market sensitivities
- During Q2 2009, AEGON implemented a macro hedge program for equity
exposure related to its retail variable annuity portfolio to reduce the
sensitivity of AEGON's capital position to equity market movements.
This program, a combination of out-of-the-money put options and linear
hedge instruments, is in place for twelve months, but can be extended
for a longer period. The hedge instruments will be carried at fair
value through profit or loss and will be reported under fair value
items.
FINANCIAL OVERVIEW
EUR millions Q2 2009 Q1 2009 % Q2 2008
Underlying earnings before
tax by line of business
Life and protection 266 239 11 252
Individual savings and
retirement products 62 (313) N.M. 115
Pensions and asset
management 83 42 98 129
Institutional products 29 89 (67) 99
Life reinsurance 13 (23) N.M. -
Distribution 1 6 (83) 8
General insurance 12 (1) N.M. 20
Interest charges and other (72) (63) (14) (38)
Share in net results
of associates 10 2 N.M. 11
Underlying earnings before tax 404 (22) N.M. 596
Over/(under) performance
of fair value items (31) (197) 84 48
Operating earnings before tax 373 (219) N.M. 644
Operating earnings before
tax by line of business
Life and protection 270 179 51 264
Individual savings and
retirement products 88 (306) N.M. 139
Pensions and asset management 35 (135) N.M. 97
Institutional products 131 13 N.M. 155
Life reinsurance 61 59 3 3
Distribution 1 6 (83) 8
General insurance 12 (1) N.M. 20
Interest charges and other (235) (36) N.M. (53)
Share in net results
of associates 10 2 N.M. 11
Operating earnings before tax 373 (219) N.M. 644
Gains/(losses) on investments 35 173 (80) (212)
Impairment charges (393) (386) (2) (98)
Other income/(charges) (353) (23) N.M. 9
Income before tax (338) (455) 26 343
Income tax 177 282 (37) (67)
Net income (161) (173) 7 276
Net underlying earnings 357 (14) N.M. 437
Net operating earnings 331 (163) N.M. 479
Underlying earnings
geographically
Americas 280 (68) N.M. 441
The Netherlands 129 72 79 116
United Kingdom 20 7 186 48
Other countries 47 30 57 29
Holding and other (72) (63) (14) (38)
Underlying earnings
before tax 404 (22) N.M. 596
Operating earnings
geographically
Americas 461 (100) N.M. 541
The Netherlands 76 (118) N.M. 79
United Kingdom 22 4 N.M. 48
Other countries 49 31 58 29
Holding and other (235) (36) N.M. (53)
Operating earnings
before tax 373 (219) N.M. 644
Commissions and expenses 1,504 1,618 (7) 1,515
of which operating
expenses 814 842 (3) 772
- TABLE CONTINUED -
Ytd Ytd
EUR millions % 2009 2008 %
Underlying earnings before
tax by line of business
Life and protection 6 505 504 -
Individual savings and retirement products (46) (251) 231 N.M.
Pensions and asset management (36) 125 250 (50)
Institutional products (71) 118 207 (43)
Life reinsurance N.M. (10) 43 N.M.
Distribution (88) 7 17 (59)
General insurance (40) 11 37 (70)
Interest charges and other (89) (135) (55) (145)
Share in net results of associates (9) 12 20 (40)
Underlying earnings before tax (32) 382 1,254 (70)
Over/(under) performance of fair value items (165) (228) (393) 42
Operating earnings before tax (42) 154 861 (82)
Operating earnings before tax
by line of business
Life and protection 2 449 477 (6)
Individual savings and retirement products (37) (218) 81 N.M.
Pensions and asset management (64) (100) 78 N.M.
Institutional products (15) 144 100 44
Life reinsurance N.M. 120 34 N.M.
Distribution (88) 7 17 (59)
General insurance (40) 11 37 (70)
Interest charges and other N.M. (271) 17 N.M.
Share in net results of associates (9) 12 20 (40)
Operating earnings before tax (42) 154 861 (82)
Gains/(losses) on investments N.M. 208 (126) N.M.
Impairment charges N.M. (779) (130) N.M.
Other income/(charges) N.M. (376) (45) N.M.
Income before tax N.M. (793) 560 N.M.
Income tax N.M. 459 (131) N.M.
Net income N.M. (334) 429 N.M.
Net underlying earnings (18) 343 940 (64)
Net operating earnings (31) 168 654 (74)
Underlying earnings geographically
Americas (37) 212 919 (77)
The Netherlands 11 201 229 (12)
United Kingdom (58) 27 93 (71)
Other countries 62 77 68 13
Holding and other (89) (135) (55)(145)
Underlying earnings before tax (32) 382 1,254 (70)
Operating earnings geographically
Americas (15) 361 645 (44)
The Netherlands (4) (42) 38 N.M.
United Kingdom (54) 26 93 (72)
Other countries 69 80 68 18
Holding and other N.M. (271) 17 N.M.
Operating earnings before tax (42) 154 861 (82)
Commissions and expenses (1) 3,122 2,931 7
of which operating expenses 5 1,656 1,555 6
Overview
AEGON reported a net loss of
Underlying earnings before tax amounted to
Fair value items contributed a negative
Net income during the second quarter of 2009 was negatively impacted by
impairment charges of
Net income in the second quarter of 2009 also included a tax gain of
Underlying earnings before tax
In Q2 2009, underlying earnings before tax for the company totaled
- US employee benefit plan accounting mismatch of EUR (15) million:
- Restructuring charges of EUR (18) million;
- Accelerated amortization of DPAC related to universal life in Canada of
EUR (23) million;
- Reserve adjustments of EUR 20 million.
Underlying earnings in the Americas improved significantly compared with Q1 2009 when lower equity markets led to a strengthening in minimum guarantee reserves and accelerated amortization of deferred policy acquisition costs (DPAC).
Compared with Q2 2008 however, earnings from the Americas decreased to
accelerated amortization of DPAC in the Life and Protection line (
In
Underlying earnings in the
Underlying earnings from Other countries, which exclude earnings from the
Taiwanese life business this quarter, amounted to
Net income
Net income for the second quarter of 2009 included a total
underperformance of fair value items of
In the Americas, fair value items showed an overperformance of
In Q2 2009, fair value items included a
Three bonds issued by AEGON N.V. and their hedge instruments are held at
fair value through profit or loss. In previous quarters, the widening of
AEGON's credit spread had a positive contribution to earnings. In Q2 2009
however, AEGON's credit spread narrowed substantially, leading to a loss of
Gains on investments
Gains on investments during the second quarter of 2009 amounted to
Impairment charges
Impairments during the second quarter of 2009 totaled
Tax
Net income in the second quarter of 2009 included a tax gain of
The loss from the sale of AEGON's Taiwanese life activities did not lead to tax relief on earnings for the second quarter of 2009.
Commissions and expenses
Compared with Q1 2009, commissions and expenses decreased by 7% to
Compared with Q2 2008, commissions and expenses were down 5% on a constant
currency basis. On the same basis, operating expenses were up 1% as an
increase in employee benefit plan expenses and restructuring charges offset
further cost savings. Operating expenses also increased as a result of
acquisitions in Central &
Sales
EUR millions Q2 2009 Q1 2009 % Q2 2008
New life sales
Life single premiums 1,504 2,025 (26) 2,880
Life recurring premiums annualized 318 341 (7) 441
Total recurring plus 1/10 single 469 543 (14) 729
New premium production accident
and health insurance 146 164 (11) 141
New premium production
general insurance 11 12 (8) 16
Gross deposits (on and off balance)
by line of business
Fixed annuities 928 1,628 (43) 875
Variable annuities 949 714 33 717
Saving deposits 779 580 34 688
Retail mutual funds 671 642 5 908
Pensions and asset management 2,319 2,829 (18) 2,461
Institutional guaranteed products 1,115 1,848 (40) 3,481
Life reinsurance 1 - N.M. 1
Total gross deposits 6,762 8,241 (18) 9,131
Total gross deposits excl.
institutional guaranteed products 5,647 6,393 (12) 5,650
Net deposits (on and off balance)
by line of business
Fixed annuities 145 688 (79) (24)
Variable annuities 412 78 N.M. (102)
Saving deposits 43 (67) N.M. 114
Retail mutual funds 23 (98) N.M. 416
Pensions and asset management 246 506 (51) 180
Institutional guaranteed products (1,432) (2,354) 39 401
Life reinsurance (12) (16) 25 (14)
Total net deposits (575) (1,263) 54 971
Total net deposits excl.
institutional guaranteed products 857 1,091 (21) 570
- TABLE CONTINUED -
Ytd Ytd
EUR millions % 2009 2008 %
New life sales
Life single premiums (48) 3,529 5,637 (37)
Life recurring
premiums annualized (28) 659 851 (23)
Total recurring
plus 1/10 single (36) 1,012 1,415 (28)
New premium production
accident and health
insurance 4 310 307 1
New premium
production general
insurance (31) 23 32 (28)
Gross deposits
(on and off balance)
by line of business
Fixed annuities 6 2,556 1,181 116
Variable annuities 32 1,663 1,402 19
Saving deposits 13 1,359 1,336 2
Retail mutual funds (26) 1,313 1,472 (11)
Pensions and asset
management (6) 5,148 5,644 (9)
Institutional
guaranteed products (68) 2,963 6,730 (56)
Life reinsurance - 1 2 (50)
Total gross deposits (26) 15,003 17,767 (16)
Total gross deposits
excl. institutional
guaranteed products - 12,040 11,037 9
Net deposits (on and
off balance) by line
of business
Fixed annuities N.M. 833 (819) N.M.
Variable annuities N.M. 490 (254) N.M.
Saving deposits (62) (24) 42 N.M.
Retail mutual funds (94) (75) 587 N.M.
Pensions and asset
management 37 752 1,350 (44)
Institutional
guaranteed products N.M. (3,786) (794) N.M.
Life reinsurance 14 (28) (29) 3
Total net deposits N.M. (1,838) 83 N.M.
Total net deposits
excl. institutional
guaranteed products 50 1,948 877 122
REVENUE GENERATING INVESTMENTS
June 30, Mar. 31,
2009 2009 %
Revenue generating investments (total) 341,815 334,280 2
Investments general account 131,533 133,130 (1)
Investments for account of policyholders 112,107 103,312 9
Off balance sheet investments third parties 98,175 97,838 -
Sales
Total new life sales in Q2 2009, excluding
Total new life sales in the Americas were in line with Q1 2009. Retail life sales increased 7% from Q1 2009 reflecting expanded distribution, particularly in the term life insurance market, offset by lower sales of both BOLI/COLI and life reinsurance.
In
New life sales in the
In Other countries new life sales, excluding
In Central &
With the exception of
Deposits
Total gross deposits of
with Q1 2009. The decline was due mainly to lower fixed annuity deposits in the Americas - the result of a reduction in AEGON's crediting rates since the end of Q1 2009. Pension deposits in the Americas remained strong, but were down compared with the previous quarter, a reflection of seasonal factors. Sales of variable annuities were up by 33% compared with Q1 2009 due to improved markets.
Gross deposits in Other countries amounted to
Net deposits, excluding institutional guaranteed products, totaled
Value of new business
Value of new business (VNB) amounted to
FINANCIAL OVERVIEW, Q2 2009 GEOGRAPHICALLY
United
Americas Kingdom The
USD GBP Americas Netherlands
Underlying earnings
before tax by line of
business
217 11 Life and protection 159 75
Individual savings and
79 - retirement products 66 (10)
Pensions and asset
17 8 management 13 57
41 - Institutional products 29 -
17 - Life reinsurance 13 -
- (2) Distribution - 3
- - General insurance - 4
Interest charges and other
Share in net results of
- - associates - -
Underlying earnings before
371 17 tax 280 129
Over/(under) performance
240 2 of fair value items 181 (53)
Operating earnings
611 19 before tax 461 76
Operating earnings before
tax by line of business 228 11
Life and protection 167 71
110 - Individual savings and
retirement products 90 (10)
15 10 Pensions and asset
management 12 8
174 - Institutional products 131 -
84 - Life reinsurance 61 -
- (2) Distribution - 3
- - General insurance - 4
Interest charges and other
Share in net results of
- - associates - -
Operating earnings before
611 19 tax 461 76
(4) 25 Gains/(losses) on
investments (3) (42)
(449) (31) Impairment charges (330) (28)
- 30 Other income/(charges) (1) -
158 43 Income before tax 127 6
214 (25) Income tax 155 (2)
372 18 Net income 282 4
343 21 Net underlying earnings 259 93
505 22 Net operating earnings 380 54
- TABLE CONTINUED -
Holding,
other
United Other activities & Total
Kingdom countries eliminations EUR
Underlying earnings
before tax by line
of business
Life and protection 14 18 - 266
Individual savings and
retirement products - 6 - 62
Pensions and asset management 8 5 - 83
Institutional products - - - 29
Life reinsurance - - - 13
Distribution (2) - - 1
General insurance - 8 - 12
Interest charges and other (72) (72)
Share in net results of associates - 10 - 10
Underlying earnings before tax 20 47 (72) 404
Over/(under) performance of
fair value items 2 2 (163) (31)
Operating earnings before tax 22 49 (235) 373
Operating earnings before tax
by line of business
Life and protection 14 18 - 270
Individual savings and
retirement products - 8 - 88
Pensions and asset management 10 5 - 35
Institutional products - - - 131
Life reinsurance - - - 61
Distribution (2) - - 1
General insurance - 8 - 12
Interest charges and other (235) (235)
Share in net results of associates - 10 - 10
Operating earnings before tax 22 49 (235) 373
Gains/(losses) on investments 28 2 50 35
Impairment charges (35) - - (393)
Other income/(charges) 33 (385) - (353)
Income before tax 48 (334) (185) (338)
Income tax (28) (9) 61 177
Net income 20 (343) (124) (161)
Net underlying earnings 24 38 (57) 357
Net operating earnings 25 40 (168) 331
- Underlying earnings before tax of USD 371 million, a substantial
improvement on recent quarters
- Net income includes USD 240 million contribution from fair value items
driven by tightening credit spreads and lower equity market
volatilities
- Impairments of USD 449 million, primarily on mortgage-backed assets and
corporate bonds
- Retail life sales up compared to Q1 2009; net deposits of USD 1.0
billion (excluding institutional guaranteed products)
Overview
Earnings from the Americas in Q2 2009 were up significantly compared to Q1
2009 as financial markets improved during the quarter. Compared with last year
however, earnings from the Americas decreased to
Net impairments amounted to
Net income also included a tax gain related to cross border intercompany
reinsurance transactions between
Retail life sales increased 7% over Q1 2009 reflecting expanded distribution, particularly in the term life insurance market.
Underlying earnings before tax
AEGON reported underlying earnings before tax in the Americas for Q2 2009
of
Earnings from Life & Protection amounted to
business,
- Individual Savings & Retirement earnings totaled USD 79 million. The
decline in earnings compared to Q2 2008 was the result primarily of
lower fee income in the variable annuity and mutual fund business, as
well as a narrowing of spreads. Earnings in Q2 2009 included USD 10
million from increased employee benefit plan expenses;
- Pensions & Asset Management earnings decreased to USD 17 million from
USD 50 million in Q2 2008, a result mainly of lower fees from reduced
asset balances and increased employee benefit plan expenses (USD 10
million);
- Earnings from the Institutional business amounted to USD 41 million,
down from USD 155 million in Q2 2008. Earnings last year had benefited
from a widening in spreads due to a decline in short-term rates. In Q2
2009, earnings were severely impacted by narrowing in spreads as a
result of a higher asset allocation to cash following the decision to
scale down AEGON's institutional spread business;
- In the Life Reinsurance business underlying earnings amounted to USD 17
million. Earnings in Q2 2008 included a USD 49 million reserve
strengthening charge. Earnings in Q2 2009 were affected by adverse
mortality experience (USD 10 million), as well as lower investment
spreads.
Net income
AEGON reported net income in the Americas for Q2 2009 of USD 372 million.
Fair value items showed an overperformance of
Net income in the Americas included
Net income included a tax gain related to cross border intercompany
reinsurance transactions (
Commissions and expenses
Total commissions and expenses were down 5% in Q2 2009 compared to the
same period last year. Q2 2009 operating expenses were up 4% due to an
increase in employee benefit plan expenses of
Sales and deposits
Total new life sales in the Americas were in line with Q1 2009. Retail life sales increased 7% over Q1 2009 reflecting expanded distribution, particularly in the term life insurance market, offset by lower sales of both BOLI/COLI and life reinsurance.
Sales of accident and health products were down 10% compared with Q2 2008, the result partly of a decision to discontinue the auto credit business.
Total gross deposits, excluding institutional guaranteed products, were
down 14% compared to Q1 2009. Net deposits, excluding institutional guaranteed
products, totaled
Following the reduction in AEGON's crediting rates since the end of Q1 2009, fixed annuities sales were down, in line with expectations. Sales of variable annuities rose by 37% due to improved market conditions. Retail mutual fund sales recovered from the low levels seen during the previous quarters, a result of higher equity markets.
Sales of retirement plans in the pension business continued to be strong, particularly taking into account the impact of lower financial markets. Institutional guaranteed products sales were low, following AEGON's decision early 2009 to scale down its institutional spread based business.
Value of new business
Value of new business in the Americas amounted to
Please refer to page 30 for more detailed information on VNB.
Revenue-generating investments
AEGON's total revenue-generating investments in the Americas at the end
of
AMERICAS - EARNINGS
USD millions Q2 Q1 % Q2 % Ytd Ytd %
2009 2009 2008 2009 2008
Underlying earnings before tax by
line of business
Life 118 153 (23) 214 (45) 271 373 (27)
Accident and health 99 68 46 94 5 167 209 (20)
Life and protection 217 221 (2) 308 (30) 438 582 (25)
Fixed annuities 60 86 (30) 105 (43) 146 200 (27)
Variable annuities 29 (480) N.M. 68 (57) (451) 138 N.M.
Retail mutual funds (10) (9) (11) 3 N.M. (19) 7 N.M.
Individual savings and
retirement products 79 (403) N.M. 176 (55) (324) 345 N.M.
Pensions and asset
Management 17 10 70 50 (66) 27 95 (72)
Institutional
guaranteed products 30 105 (71) 141 (79) 135 282 (52)
BOLI/COLI 11 12 (8) 14 (21) 23 35 (34)
Institutional products 41 117 (65) 155 (74) 158 317 (50)
Life reinsurance 17 (30) N.M. 1 N.M. (13) 66 N.M.
Share in net results of
Associates - (3) N.M. 1 N.M. (3) 2 N.M.
Underlying earnings
before tax 371 (88) N.M. 691 (46) 283 1,407 (80)
Over/(under)
performance of fair
value items 240 (42) N.M. 141 70 198 (419) N.M.
Operating earnings
before tax 611 (130) N.M. 832 (27) 481 988 (51)
Operating earnings before
tax by line of business
Life 132 120 10 232 (43) 252 367 (31)
Accident and health 96 56 71 98 (2) 152 207 (27)
Life and protection 228 176 30 330 (31) 404 574 (30)
Fixed annuities 81 41 98 133 (39) 122 141 (13)
Variable annuities 39 (426) N.M. 69 (43) (387) (34) N.M.
Retail mutual funds (10) (9) (11) 3 N.M. (19) 7 N.M.
Individual savings and
retirement products 110 (394) N.M. 205 (46) (284) 114 N.M.
Pensions and asset
Management 15 (3) N.M. 54 (72) 12 92 (87)
Institutional 166 8 N.M. 218 (24) 174 119 46
guaranteed products
BOLI/COLI 8 10 (20) 17 (53) 18 34 (47)
Institutional products 174 18 N.M. 235 (26) 192 153 25
Life reinsurance 84 76 11 7 N.M. 160 53 N.M.
Share in net results of
Associates - (3) N.M. 1 N.M. (3) 2 N.M.
Operating earnings
before tax 611 (130) N.M. 832 (27) 481 988 (51)
Gains/(losses) on
Investments (4) 36 N.M. (73) 95 32 (144) N.M.
Impairment charges (449) (370) (21) (126) N.M. (819) (147) N.M.
Other income/(charges) - 1 N.M. - N.M. 1 - N.M.
Income before tax 158 (463) N.M. 633 (75) (305) 697 N.M.
Income tax 214 290 (26) (179) N.M. 504 (282) N.M.
Net income 372 (173) N.M. 454 (18) 199 415 (52)
Net underlying earnings 343 (57) N.M. 502 (32) 286 1,024 (72)
Net operating earnings 505 (90) N.M. 616 (18) 415 727 (43)
Commissions and 1,262 1,311 (4) 1,328 (5) 2,573 2,497 3
Expenses of which
operating expenses 577 562 3 555 4 1,139 1,102 3
For the amounts in euro see the Financial Supplement.
AMERICAS - SALES
USD millions Q2 2009 Q1 2009 % Q2 % Ytd Ytd %
2008 2009 2008
New life sales
Life single
premiums 138 91 52 218 (37) 229 459 (50)
Life recurring
premiums
annualized 170 173 (2) 240 (29) 343 478 (28)
Total recurring
plus 1/10
single 184 182 1 262 (30) 366 524 (30)
Life 137 128 7 184 (26) 265 371 (29)
BOLI/COLI - 2 N.M. 6 N.M. 2 20 (90)
Life
Reinsurance 47 52 (10) 72 (35) 99 133 (26)
Total recurring
plus 1/10
single 184 182 1 262 (30) 366 524 (30)
New premium
production
accident and health
insurance 193 203 (5) 215 (10) 396 452 (12)
Gross deposits (on and off
balance) by line of business
Fixed annuities 1,292 2,120 (39) 1,349 (4) 3,412 1,808 89
Variable
annuities 1,071 780 37 1,047 2 1,851 2,021 (8)
Retail mutual
Funds 513 307 67 886 (42) 820 1,659 (51)
Pensions and
asset
management 2,623 3,169 (17) 3,130 (16) 5,792 7,382 (22)
Institutional
guaranteed
products 1,548 2,407 (36) 5,433 (72) 3,955 10,303 (62)
Life
Reinsurance 1 - N.M. 1 - 1 3 (67)
Total gross 7,048 8,783 (20) 11,846 (41)15,831 23,176 (32)
deposits
Total gross
deposits
excl. institutional
guaranteed
products 5,500 6,376 (14) 6,413 (14)11,876 12,873 (8)
Net deposits (on and off
balance) by line of business
Fixed annuities 216 896 (76) (62) N.M. 1,112 (1,254) N.M.
Variable
annuities 353 (40) N.M. (228) N.M. 313 (507) N.M.
Retail mutual
funds 104 (256) N.M. 474 (78) (152) 721 N.M.
Pensions and
asset
management 331 1,053 (69) 489 (32) 1,384 2,133 (35)
Institutional
guaranteed
products (1,989)(3,065) 35 576 N.M.(5,054) (1,216) N.M.
Life
reinsurance (18) (20) 10 (21) 14 (38) (44) 14
Total net (1,003)(1,432) 30 1,228 N.M.(2,435) (167) N.M.
deposits
Total net deposits
excl. institutional
guaranteed
products 986 1,633 (40) 652 51 2,619 1,049 150
REVENUE GENERATING INVESTMENTS
June Mar.
30, 31,
2009 2009 %
Revenue
generating
investments
(total) 295,325 279,399 6
Investments
general account 123,131 117,934 4
Investments for
account of
policyholders 62,000 55,791 11
Off balance
sheet
investments
third parties 110,194 105,674 4
For the amounts in euro see the Financial Supplement.
- Underlying earnings before tax increase to EUR 129 million
- Life sales of EUR 32 million; decline from Q1 due to volatility in
group pension market
- Value of new business rises to EUR 36 million, a result of high margins
on mortgage sales
Overview
AEGON reported underlying earnings of
Fair value items underperformed long-term expectations. Impairments,
primarily on bonds, totaled
Underlying earnings before tax
- Earnings from Life & Protection amounted to EUR 75 million, up from Q2
2008 primarily because of a EUR 20 million one-time release of
provisions and higher investment income in the Life business;
- The Savings business reported a loss of EUR 10 million, due to
continued pressure on margins and volumes from fierce competition in
the savings market;
- Earnings from Pensions & Asset Management amounted to EUR 57 million,
slightly down from earnings in Q2 2008, which had included a one-time
release of accruals. Technical results improved compared to Q2 2008,
but lower asset balances resulted in lower fee income;
- Earnings from Distribution amounted to EUR 3 million, down from Q2 2008
because of a slowdown in the real estate market;
- General insurance earnings totaled EUR 4 million, lower than Q2 2008
due to higher claims.
Net income
Fair value items in Q2 2009 included a
Impairments of
Commissions and expenses
Commissions and expenses were down 8%, while operating expenses decreased by 7%, both compared to Q2 2008. Operating expenses were down as a result of cost initiatives taken during the quarter, e.g. a reduction in staff and in project-related expenses.
Sales and deposits
Pension sales slowed significantly during the second quarter of 2009 and proved volatile after the standstill in the Dutch group pension market during the third and fourth quarters of last year. The first quarter of 2009 had seen strong group pension sales. Sales of single premium individual life products were down compared to Q1 2009, following increased pricing competition in the immediate annuity market.
Net mortgage production in the second quarter of 2009 amounted to
Gross deposits were up 42% compared with Q1 2009. Net deposits in the savings business showed an improvement from the previous quarter, because of seasonal factors.
Value of new business
The value of new business increased to
Please refer to page 30 for more detailed information on VNB.
Revenue-generating investments
By the end of
THE NETHERLANDS - EARNINGS
EUR millions Q2 Q1 % Q2 % Ytd Ytd %
2009 2009 2008 2009 2008
Underlying earnings before tax
by line of business
Life 68 44 55 29 134 112 61 84
Accident and health 7 11 (36) 4 75 18 12 50
Life and protection 75 55 36 33 127 130 73 78
Saving products (10) (9) (11) - N.M. (19) 1 N.M.
Individual savings
and retirement
products (10) (9) (11) - N.M. (19) 1 N.M.
Pensions and asset
management 57 26 119 60 (5) 83 111 (25)
Distribution 3 9 (67) 8 (63) 12 19 (37)
General insurance 4 (9) N.M. 9 (56) (5) 19 N.M.
Share in net results
of associates - - N.M. 6 N.M. - 6 N.M.
Underlying earnings
before tax 129 72 79 116 11 201 229 (12)
Over/(under)
performance of fair
value items (53) (190) 72 (37) (43) (243) (191) (27)
Operating earnings
before tax 76 (118) N.M. 79 (4) (42) 38 N.M.
Operating earnings before
tax by line of business
Life 64 18 N.M. 27 137 82 40 105
Accident and health 7 11 (36) 4 75 18 12 50
Life and protection 71 29 145 31 129 100 52 92
Saving products (10) (9) (11) - N.M. (19) 1 N.M.
Individual savings
and retirement
products (10) (9) (11) - N.M. (19) 1 N.M.
Pensions and asset
Management 8 (138) N.M. 25 (68) (130) (59) (120)
Distribution 3 9 (67) 8 (63) 12 19 (37)
General insurance 4 (9) N.M. 9 (56) (5) 19 N.M.
Share in net results
of associates - - N.M. 6 N.M. - 6 N.M.
Operating earnings 76 (118) N.M. 79 (4) (42) 38 N.M.
before tax
Gains/(losses) on
Investments (42) 110 N.M. (115) 63 68 (39) N.M.
Impairment charges (28) (78) 64 (4) N.M. (106) (21) N.M.
Income before tax 6 (86) N.M. (40) N.M. (80) (22) N.M.
Income tax (2) 45 N.M. 45 N.M. 43 46 (7)
Net income 4 (41) N.M. 5 (20) (37) 24 N.M.
Net underlying
Earnings 93 55 69 92 1 148 184 (20)
Net operating
Earnings 54 (87) N.M. 64 (16) (33) 42 N.M.
Commissions and 274 307 (11) 299 (8) 581 609 (5)
expenses of which
operating
expenses 192 217 (12) 207 (7) 409 426 (4)
THE NETHERLANDS - SALES
EUR millions Q2 2009 Q1 2009 % Q2 2008 %
New life sales
Life single premiums 145 391 (63) 443 (67)
Life recurring premiums annualized 17 23 (26) 24 (29)
Total recurring plus 1/10 single 32 62 (48) 68 (53)
Life 19 23 (17) 23 (17)
Pensions 13 39 (67) 45 (71)
Total recurring plus 1/10 single 32 62 (48) 68 (53)
New premium production accident
and health insurance 3 7 (57) 3 -
New premium production
general insurance 6 7 (14) 7 (14)
Gross deposits (on and off balance)
by line of business
Saving deposits 779 580 34 688 13
Pensions and asset management 62 11 N.M. 80 (23)
Total gross deposits 841 591 42 768 10
Net deposits (on and off balance)
by line of business
Saving deposits 43 (67) N.M. 114 (62)
Pensions and asset management (73) (113) 35 68 N.M.
Total net deposits (30) (180) 83 182 N.M.
- TABLE CONTINUED -
EUR millions Ytd 2009 Ytd 2008 %
New life sales
Life single premiums 536 888 (40)
Life recurring premiums annualized 40 50 (20)
Total recurring plus 1/10 single 94 139 (32)
Life 42 54 (22)
Pensions 52 85 (39)
Total recurring plus 1/10 single 94 139 (32)
New premium production accident
and health insurance 10 9 11
New premium production general insurance 13 15 (13)
Gross deposits (on and off balance)
by line of business
Saving deposits 1,359 1,336 2
Pensions and asset management 73 127 (43)
Total gross deposits 1,432 1,463 (2)
Net deposits (on and off balance)
by line of business
Saving deposits (24) 42 N.M.
Pensions and asset management (186) 104 N.M.
Total net deposits (210) 146 N.M.
REVENUE GENERATING INVESTMENTS
June 30, Mar. 31,
2009 2009 %
Revenue generating investments (total) 65,772 63,427 4
Investments general account 33,907 32,875 3
Investments for account of policyholders 20,065 19,357 4
Off balance sheet investments third parties 11,800 11,195 5
- Underlying earnings before tax of GBP 17 million, down primarily due to
lower fund related charges in the pension business
- New life sales decline 16% compared to Q1 2009, driven by annuities
- VNB down compared to Q1 2009 following change in product mix
SOURCE AEGON N.V.
Copyright (2009) PR Newswire. All Rights Reserved.
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