Edgar Filing: AEGON NV

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Investor relations

Robin Boon

Willem van den Berg

+ 31 (0) 70 344 8956

+ 31 (0) 70 344 8305

gcc@aegon.com

ir@aegon.com

Form 6-K

Securities and Exchange Commission

Washington, D.C. 20549

Form 6-K

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d/16

of the Securities Exchange Act of 1934

August 2013

AEGON N.V.

AEGONplein 50

2591 TV THE HAGUE

The Netherlands

AEGON’s press release, dated August 8, 2013, is included as appendix and incorporated herein by reference.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		AEGON N.V.
		(Registrant)

Date: August 8, 2013	By	/s/ E. Lagendijk
		E. Lagendijk
		Executive Vice President and
		General Counsel

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Q2 2013 Results

The Hague – August 8, 2013

Aegon grows earnings, sales and cash flows in Q2 2013

•

Strong underlying earnings; net income impacted by fair value items

•

Underlying earnings increase to EUR 478 million; positive effects of business growth and favorable equity markets partly offset by restructuring in Spain and unfavorable currency exchange rates

•

Net income of EUR 243 million impacted by fair value losses mainly due to higher equity markets, increased equity market volatility and rising interest rates

•

Return on equity amounts to 6.7%, or 7.4% excluding run-off businesses

•

Positive sales trend in accumulation and at-retirement products continues

•

New life sales increase 21% to EUR 520 million; particularly strong pension sales in the UK and NL

•

Accident and health and general insurance sales decrease 7% to EUR 187 million due to the termination of certain distribution partnerships

•

Deposits up 30% to EUR 12.7 billion; significant increases in asset management, variable annuity, retail mutual fund and pension deposits partly offset by lower stable value deposits

•

Market consistent value of new business increases significantly to EUR 202 million, the result of increased sales volumes, higher interest rates and management actions to improve margins

•

Continued strong capital position and cash flows

•

IGD^a⁾ solvency ratio at 220%, reflecting strong operating unit capital positions

•

Excess capital at holding increases to EUR 1.9 billion

•

Operational free cash flow of EUR 674 million; market impact and one-time items of EUR 308 million

•

Interim dividend increases to EUR 0.11 per share; dilutive effect of stock dividend to be neutralized

Statement of Alex Wynaendts, CEO

“The growth of our underlying earnings and sales during the quarter demonstrates that Aegon continues to benefit from its strategic transformation. Particularly strong performance in pensions and variable annuities in our key markets shows ongoing customer demand for our core retirement products.

“We continued to execute our strategy with a series of high-quality partnerships that strengthen Aegon’s distribution networks, expanding our reach and positioning us for further sales growth in the Americas, UK and Spain. These agreements are a unique opportunity to create long-term relationships with a large number of potential customers, as all of us at Aegon continue working to help people secure their financial future.

“Our strong capital position and operational free cash flows enable us to increase our interim dividend, a sign of our confidence in the company. With the business positioned to benefit from rising interest rates, recent developments in the US and elsewhere allow us to create further long-term value for both our customers and our shareholders.

“I am pleased to say that our solid performance this quarter shows that the decisions we have taken are the right ones, and supports future strategic actions that we feel are necessary to achieve a leadership position in each of our chosen markets.”

Key performance indicators


amounts in EUR millions ^b)	Notes		Q2 2013			Q1 2013			%			Q2 2012			%			YTD 2013			YTD 2012			%
Underlying earnings before tax		1		478			445			7			457			5			923			896			3
Net income		2		243			204			19			249			(2	)		447			774			(42	)
Sales		3		1,975			1,738			14			1,604			23			3,713			3,362			10
Market consistent value of new business		4		202			232			(13	)		117			73			434			242			79
Return on equity		5		6.7	%		6.3	%		6			7.1	%		(6	)		6.3	%		7.0	%		(10	)

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STRATEGIC HIGHLIGHTS

•

Progress on execution of strategy highlighted at recent investor day

•

New distribution agreements to drive new business growth

•

Further signs that the company’s customer-centric strategy is delivering results

Strategic update

Aegon continues to make solid progress on its strategic transformation as highlighted by management at Aegon’s Analyst & Investor Conference in London. At the conference, Aegon’s CEO, Alex Wynaendts, emphasized the need to leverage Aegon’s strength in the At-Retirement market, while remaining focused on creating a truly customer-centric culture, particularly through on-going investment in technology and innovation. Aegon’s newly appointed CFO, Darryl Button, provided the trajectory toward the company’s 2015 financial targets, discussed Aegon’s capital management policy and announced a three-year capital deployment strategy.

Aegon is on track to achieve its target to double the proportion of earnings generated from fee-based businesses to 30-35%, as well as its aim to achieve operational free cash flows of between EUR 1.3 and 1.6 billion by 2015. Supported by new business growth at attractive returns, Aegon is on a clear path toward higher earnings and return on equity (RoE) growth. In an environment of low interest rates, however, the company recognizes that its underlying earnings and RoE have been impacted negatively, in line with previously provided sensitivities. Aegon is currently on a trajectory to deliver an increase in underlying earnings before tax of 7-10% from 2012 to 2015. With regard to its return on equity target, Aegon is currently on a path to achieve an RoE of between 8-10%, assuming current reinvestment yields until 2015, and taking into account the recent preferred share transaction and further capital deleveraging. Management, however, affirms its ambition to achieve an RoE of 10-12% and recognizes that additional actions are required to do so.

Aegon outlined its disciplined capital management policy to promote sustainable cash flows and support its strategic transformation. The company’s business unit capitalization between its self-imposed target and buffer levels enables it to satisfy local regulatory and rating agency requirements while facilitating stable dividends to the holding. Holding excess capital allows Aegon to service debt, pay a sustainable dividend to shareholders and execute its strategy. Management also introduced a three-year capital deployment strategy, supported by the strong capitalization levels in most of Aegon’s business units and at the holding. This balanced strategy includes commitments to reduce leverage, maintain a sustainable cash dividend and execute strategic priorities.

Aegon continues to pursue its strategic aim to be a leader in all of its chosen markets, supported by four strategic objectives embedded in all Aegon businesses: Optimize portfolio; Enhance customer loyalty; Deliver operational excellence; and Empower employees. These provide the strategic framework for the company’s ambition to become the most-recommended life insurance and pension provider by customers and business partners, as well as the most-preferred employer in the sector.

Optimize portfolio

Continued success in developing new distribution agreements has been a key driver of new business growth, allowing Aegon to expand its market presence and further strengthen its market position. In the Americas, approximately 20% of Transamerica’s new Life & Protection business is from distribution that did not exist five years ago. Variable annuity sales growth in the Americas has also been supported by new distribution agreements. These include the launch of a private label variable annuity with Voya, announced earlier this year, and the recently-announced agreement with leading brokerage firm Edward Jones. In the United Kingdom, Aegon was selected by Mercer as one of their three large defined-contribution provider partners, and as the sole partner for their SME business. This important agreement highlights the relevance and growing success of Aegon’s new pension platform, and builds on the distribution agreement with Barclays Bank announced earlier this year.

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In Spain, Aegon began distributing insurance products through its expanded network, created as a result of a significant new partnership with Banco Santander, Spain’s leading bank.

Aegon identified further opportunities to optimize its portfolio to achieve its ambition. In the United Kingdom, Aegon announced the sale of its distribution business, Positive Solutions, allowing the company to focus fully on its life and pension businesses and the success of its new platform business. Aegon will continue to review all of its businesses for strategic fit and return prospects. In Spain, Aegon’s previously announced exits of its joint ventures with Unnim and Caja de Ahorros del Mediterráneo (CAM) closed on May 7, 2013 and July 19, 2013 respectively.

Deliver operational excellence

Strict pricing discipline has led to increased profitability, despite lower interest rates, and will be a driver of earnings growth and RoE expansion. Aegon’s strict market consistent pricing standards encourage products that are less sensitive to financial markets. It has also led to product adjustments, including real-time pricing of universal life products and re-priced long-term care and variable annuities in the US, and re-priced disability products in the Netherlands.

Aegon’s continued focus on cost efficiency is evident with recently-announced changes to its distribution structure in the United Kingdom, including the closure of six regional sales offices. These cost savings are in addition to significant reductions already realized in the United Kingdom. Cost discipline extends to all parts of the organization. The Dutch business is on track to achieve its cost reduction targets. In the Americas, the aim is to keep operating expenses flat while growing the business faster than the industry. However, sales and employee related expenses incurred due to the exceptionally strong growth levels put upward pressure on cost levels. At the holding, a reduction of operating expenses and lower funding costs through deleveraging have been realized.

Enhance customer loyalty

Aegon believes that creating a customer-centric culture will enable it to further grow by responding to changing markets and customer behaviors. A key element of Aegon’s strategy is to get closer to its customers by increased deployment of technology at all levels of the organization. In the US, Transamerica released the Retirement Outlook Estimator, a new mobile app designed to help users understand and plan for a healthy financial future by projecting a personalized retirement outlook against their retirement goals. In India, Aegon Religare won the E-Business leader award for innovative online life insurance products iTerm and iHealth. These simple online products, the first of their kind available in India, were commended for improving digital distribution to the customer.

For the fourth year in a row, Aegon won the prestigious Pension Provider of the Year award at the European Pensions Awards. The award recognizes the work of multinational companies and their advisors to develop and implement effective pension solutions. It reflects Aegon’s expertise in and dedication to cross-border European pension solutions, and validates Aegon’s client-focused approach to pensions.

Empower employees

Aegon continues to implement initiatives to help employees better understand Aegon’s goals and how they contribute individually to the company’s success. In an effort to develop a truly customer-centric culture, Aegon recently rolled out its Customer License Program, encouraging employees to focus on solutions to customer issues in which they have particular interest. Employees in this program spend time at one of the company’s customer service call centers, with one of its intermediaries or in another capacity that provides them with direct customer interaction. Aegon believes this initiative, and others similar to it, will help its employees better relate to customers, ultimately translating into a stronger market position with increased customer brand loyalty.

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Financial overview ^c)


EUR millions	Notes		Q2 2013			Q1 2013			%			Q2 2012			%			YTD 2013			YTD 2012			%
Underlying earnings before tax
Americas				360			312			15			349			3			672			652			3
The Netherlands				74			85			(13	)		74			—			159			155			3
United Kingdom				27			24			13			26			4			51			56			(9	)
New markets				52			62			(16	)		64			(19	)		114			152			(25	)
Holding and other				(35	)		(38	)		8			(56	)		38			(73	)		(119	)		39

Underlying earnings before tax				478			445			7			457			5			923			896			3

Fair value items				(270	)		(286	)		6			82			—			(556	)		230			—
Realized gains / (losses) on investments				82			113			(27	)		85			(4	)		195			130			50
Impairment charges				(57	)		(17	)		—			(42	)		(36	)		(74	)		(83	)		11
Other income / (charges)				27			(4	)		—			(254	)		—			23			(271	)		—
Run-off businesses				13			(14	)		—			7			86			(1	)		5			—

Income before tax				273			237			15			335			*(19*	)		510			907			*(44*	)
Income tax				(30	)		(33	)		9			(86	)		65			(63	)		(133	)		53

Net income				243			204			19			249			(2	)		447			774			*(42*	)

Net income / (loss) attributable to:
Equity holders of Aegon N.V.				242			204			19			249			(3	)		446			774			(42	)
Non-controlling interests				1			—			—			—			—			1			—			—

Net underlying earnings				361			323			12			346			4			684			684			—

Commissions and expenses				1,491			1,417			5			1,555			(4	)		2,908			2,939			(1	)
of which operating expenses		11		844			804			5			799			6			1,648			1,565			5

New life sales
Life single premiums				1,652			1,491			11			1,068			55			3,143			2,228			41
Life recurring premiums annualized				355			350			1			321			11			705			650			8

Total recurring plus 1/10 single				520			499			4			428			21			1,019			873			17

New life sales
Americas		12		124			110			13			126			(2	)		234			246			(5	)
The Netherlands				48			40			20			23			109			88			55			60
United Kingdom				292			286			2			211			38			578			424			36
New markets		12		56			63			(11	)		68			(18	)		119			148			(20	)

Total recurring plus 1/10 single				520			499			4			428			21			1,019			873			17

New premium production accident and health insurance				173			225			(23	)		187			(7	)		398			382			4
New premium production general insurance				14			14			—			13			8			28			27			4

Gross deposits (on and off balance)
Americas		12		6,417			6,988			(8	)		6,644			(3	)		13,405			14,036			(4	)
The Netherlands				327			404			(19	)		367			(11	)		731			927			(21	)
United Kingdom				73			49			49			9			—			122			17			—
New markets		12		5,855			2,563			128			2,737			114			8,418			5,820			45

Total gross deposits				12,672			10,004			27			9,757			30			22,676			20,800			9

Net deposits (on and off balance)
Americas		12		1,185			1,613			(27	)		738			61			2,798			1,799			56
The Netherlands				85			(134	)		—			(66	)		—			(49	)		(251	)		80
United Kingdom				56			40			40			(1	)		—			96			(2	)		—
New markets		12		2,233			145			—			619			—			2,378			1,983			20

Total net deposits excluding run-off businesses				3,559			1,664			*114*			1,290			*176*			5,223			3,529			48
Run-off businesses				(644	)		(1,073	)		40			(479	)		(34	)		(1,717	)		(1,639	)		(5	)

Total net deposits				2,915			591			—			811			—			3,506			1,890			86

Revenue-generating investments


	Jun. 30,		Dec. 31,
	2013		2012		%
Revenue-generating investments (total)		465,772		459,077		1

Investments general account		140,388		145,021		(3	)
Investments for account of policyholders		155,893		152,968		2
Off balance sheet investments third parties		169,491		161,088		5

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OPERATIONAL HIGHLIGHTS

Underlying earnings before tax

Aegon’s underlying earnings before tax increased 5% to EUR 478 million compared to the second quarter of 2012. Business growth and the positive effects of favorable equity markets more than offset the loss of earnings due to the sale of Prisma in the fourth quarter of 2012 and the company’s interests in partnerships in Spain (EUR 11 million), as well as the impact of unfavorable currency exchange rates (EUR 12 million).

Underlying earnings from the Americas increased to EUR 360 million. The 3% increase on the second quarter of 2012 is mainly the result of growth in Variable Annuities and Pensions, partly offset by higher sales and employee related expenses.

In the Netherlands, underlying earnings were stable at EUR 74 million as higher earnings in Life & Savings were partly offset by lower Pension earnings due to adverse underwriting results. Earnings from non-life did not increase compared to the second quarter of 2012, as improved earnings from disability were offset by adverse claim experience in general insurance.

Underlying earnings from Aegon’s operations in the United Kingdom of EUR 27 million were up 4% compared to the second quarter of 2012. Earnings were negatively impacted by adverse persistency (EUR 9 million) following the implementation of the Retail Distribution Review. It is expected that the effects of adverse persistency will start to wear off in the second half of 2013. These effects were more than made up for by favorable equity market movements, improved mortality and favorable claims experience.

Underlying earnings from New Markets decreased 19% to EUR 52 million. Higher earnings from Aegon Asset Management were more than offset by lower underlying earnings from Central & Eastern Europe and Spain. Results in Spain were impacted by EUR 8 million as a result of the divestments of the joint ventures with Banca Cívica and Unnim, while earnings from Central & Eastern Europe were impacted by unfavorable claims experience and included a charge of EUR 2 million related to the recently introduced insurance tax in Hungary.

Total holding costs decreased 38% to EUR 35 million, mainly as a result of lower net interest expenses following debt redemptions and lower operating expenses at the holding.

Net income

Net income decreased 2% to EUR 243 million as higher underlying earnings and higher other income were more than offset by losses from fair value items.

Fair value items

The results from fair value items amounted to a loss of EUR 270 million. This was primarily caused by the loss on fair value hedges without an accounting match under IFRS, which amounted to EUR 152 million in the second quarter of 2013. The main drivers were rising equity markets, increased equity market volatility, but also higher interest rates.

Fair value hedging with an accounting match, which include the hedges on Aegon’s GMWB variable annuities block and the guarantees on general account products in the Netherlands, contributed EUR 20 million to earnings. Fair value investments underperformed by EUR 75 million during the second quarter of 2013, mainly driven by alternative investments in the Americas and the residential rental real estate portfolio in the Netherlands.

The loss on other fair value items amounted to EUR 63 million, mainly driven by lower credit spreads impacting outstanding medium term notes, foreign currency movements and rising interest rates.

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Realized gains on investments

In the second quarter, realized gains on investments amounted to EUR 82 million and were the result of asset liability management and normal trading activity in the investment portfolio.

Impairment charges

Impairments were up modestly compared to last year to EUR 57 million. These were largely related to impairments on structured assets in the Americas and a single corporate exposure in the UK, as well as residential mortgage loans in the Netherlands.

Other income

Other income amounted to EUR 27 million and related mostly to the gain of EUR 102 million on the sale of the joint venture with Unnim, offset by charges in the United Kingdom related to business transformation costs (EUR 32 million) and the divestment of Positive Solutions (EUR 22 million), and a provision of EUR 25 million in the Netherlands following the KoersPlan court verdict in June.

On June 14, 2013, the Supreme Court denied Aegon’s appeal and confirmed the ruling of the Court of Appeal from 2011 in the KoersPlan case. Aegon will compensate the approximately 35,000 policyholders of KoersPlan-products who were plaintiffs in the litigation. To cover for this liability, Aegon set up a provision of EUR 25 million in the second quarter of 2013. For policyholders of KoersPlan-products not plaintiffs in the litigation, the company is establishing whether any adjustment of the premium is appropriate.

Run-off businesses

The results of run-off businesses increased to EUR 13 million, mainly due to improved results in the life reinsurance business in the Americas.

Income tax

Income tax amounted to EUR 30 million in the second quarter. The effective tax rate on underlying earnings for the second quarter of 2013 was 24%. The effective tax rate on total income was 11%, driven by the combined effects of negative fair value items taxed at nominal rates, tax credits and tax exempt items including the gain on the sale of the Unnim joint venture.

Return on equity

Return on equity decreased to 6.7% for the second quarter of 2013 as higher net underlying earnings were outweighed by higher preferred dividend payments and the increase in shareholders’ equity resulting from the conversion of the preferred shares into common shares. Return on equity for Aegon’s ongoing businesses, excluding the run-off businesses, amounted to 7.4% over the same period.

Operating expenses

In the second quarter, operating expenses increased 6% to EUR 844 million mainly as a result of higher sales and employee related expenses in the United States and business transformation costs in the United Kingdom.

Sales

Compared to the second quarter of 2012, Aegon’s total sales increased 23% to EUR 2.0 billion. New life sales were up by 21%, driven mainly by higher pension production as a result of strong market propositions in the Netherlands and the United Kingdom. In the Americas, new life sales were flat on a US dollar basis, primarily driven by lower universal life sales due to product withdrawals and product redesign, resulting from the focus on value creation. Gross deposits remained strong particularly in both the variable annuity and retail mutual fund businesses in the United States and Aegon Asset Management. Net deposits, excluding run-off businesses, amounted to EUR 3.6 billion and were driven primarily by variable annuity and retirement deposits in the United States and third party inflow at Aegon Asset Management.

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Market consistent value of new business

The market consistent value of new business increased strongly to EUR 202 million mainly as a result of strong sales growth and higher margins in the United States, as well as a higher contribution from mortgages and increased pension production in the Netherlands.

Revenue-generating investments

Revenue-generating investments declined 2% during the second quarter of 2013 to EUR 466 billion, as the negative impact of rising interest rates more than offset continued net inflows.

Capital management

Shareholders’ equity decreased EUR 2.5 billion compared to the end of the first quarter of 2013 to EUR 21.1 billion at June 30, 2013, as higher interest rates resulted in lower revaluation reserves. The revaluation reserves declined by EUR 2.0 billion to EUR 3.7 billion. Aegon’s shareholders’ equity, excluding revaluation reserves and defined benefit plan remeasurements, amounted to EUR 18.3 billion. The gross financial leverage ratio improved to 30.5% in the second quarter, as a USD 750 million senior bond which matured in June was not refinanced.

Excess capital in the holding increased to EUR 1.9 billion, as distributions to the holding and the proceeds on the sale of the joint venture with Unnim more than offset the cash used for the conversion of the preferred shares, the investment in the new joint venture with Banco Santander, dividend and interest payments and operating expenses. During the second quarter of 2013, Aegon received EUR 0.6 billion net cash distributions from its operating units. The Americas contributed EUR 0.4 billion and the Netherlands EUR 0.3 billion.

Shareholders’ equity per common share, excluding revaluation reserves and defined benefit plan remeasurements, amounted to EUR 8.69 at June 30, 2013.

At June 30, 2013, Aegon’s Insurance Group Directive (IGD) ratio slightly declined to 220%, including a 6% negative impact from the conversion of the preferred shares. Measured on a local solvency basis, the Risk Based Capital (RBC) ratio in the United States decreased to ~465% as net income for the quarter was offset by the USD 0.6 billion distributions to the holding. On a S&P basis, the surplus above the level required for a AA rating slightly declined to approximately USD 0.8 billion. The Pillar I ratio in the United Kingdom was ~170% at the end of the second quarter of 2013, reflecting favorable movements of interest rates. The IGD ratio excluding the benefit from the introduction of the ultimate forward rate and Aegon Bank in the Netherlands increased to ~235%, driven by the net income for the quarter and rising interest rates.

Cash flows

Operational free cash flows were EUR 674 million in the second quarter of 2013. Excluding one-time items of EUR (16) million and market impacts of EUR 324 million, operational free cash flows amounted to EUR 366 million. The impact of market movements during the second quarter resulted mainly from the benefit of rising interest rates in the Americas and in the Netherlands.

Interim dividend

The 2013 interim dividend amounts to EUR 0.11 per common share. The interim dividend will be paid in cash or stock at the election of the shareholder. The value of the stock dividend will be approximately equal to the cash dividend. Aegon will neutralize the dilutive effect of the stock dividend on earnings per share.

Aegon’s shares will be quoted ex-dividend on August 15, 2013. The record date is August 19, 2013. The election period for shareholders will run from August 21 up to and including September 6, 2013. The stock fraction will be based on the average share price on Euronext Amsterdam from September 2 through September 6, 2013. The stock dividend ratio will be announced on September 6, 2013 after closing of Euronext Amsterdam. The dividend will be payable as of September 13, 2013.

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Financial overview, Q2 2013 geographically ^c)


EUR millions	Americas			The Netherlands			United Kingdom			New Markets			Holding, other activities & eliminations			Total
Underlying earnings before tax by line of business
Life		158			59			27			20			—			264
Individual savings and retirement products		134			—			—			(5	)		—			129
Pensions		67			19			—			2			—			88
Non-life		—			(10	)		—			3			—			(7	)
Distribution		—			4			—			—			—			4
Asset Management		—			—			—			26			—			26
Other		—			—			—			—			(35	)		(35	)
Share in underlying earnings before tax of associates		1			2			—			6			—			9

Underlying earnings before tax		360			74			27			52			(35	)		478

Fair value items		(147	)		(36	)		—			(8	)		(79	)		(270	)
Realized gains / (losses) on investments		30			23			28			1			—			82
Impairment charges		(31	)		(14	)		(16	)		4			—			(57	)
Other income / (charges)		(1	)		(27	)		(51	)		106			—			27
Run-off businesses		13			—			—			—			—			13

Income before tax		224			20			(12	)		155			(114	)		273
Income tax		(53	)		(1	)		8			(12	)		28			(30	)

Net income		171			19			(4	)		143			(86	)		243

Net underlying earnings		258			57			29			38			(21	)		361

Employee numbers


	Jun. 30, 2013		Dec. 31, 2012
Employees excluding agents, joint ventures and associates		20,962		20,902
Agents		2,881		2,748

Total number of employees excluding joint ventures & associates		23,843		23,650
Aegon’s share of employees (including agents) in joint ventures		727		757
Aegon’s share of employees (including agents) in associates		2,334		2,443

Total		26,904		26,850

Currencies

Income statement items: average rate 1 EUR = USD 1.3124 (2012: USD 1.2962).

Income statement items: average rate 1 EUR = GBP 0.8502 (2012: GBP 0.8217).

Balance sheet items: closing rate 1 EUR = USD 1.2999 (2012: USD 1.2691; year-end 2012.Q4: USD 1.3184).

Balance sheet items: closing rate 1 EUR = GBP 0.8570 (2012: GBP 0.8091; year-end 2012.Q4: GBP 0.8111).

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AMERICAS

•

Underlying earnings before tax increase 4% to USD 469 million

•

Net income declines to USD 222 million due to lower results from fair value items

•

Sales of life insurance stable at USD 162 million, as higher term life sales were offset by lower universal life sales due to focus on profitability

•

Gross deposits of USD 8.4 billion reflect strong growth in variable annuities and retail mutual funds

Underlying earnings before tax

Underlying earnings from the Americas in the second quarter of 2013 amounted to USD 469 million. Earnings growth in both the Pension and Variable Annuities businesses and higher investment income a result of extending duration in the general account were partially offset by higher sales-related expenses of USD 9 million, resulting from strong sales growth from retirement solutions and variable annuity products.

•

Life & Protection earnings declined 1% to USD 195 million, as growth of the business was offset by lower reinvestment rates due to the low interest rate environment.

•

Earnings from Individual Savings & Retirement were up 12% to USD 172 million. Variable annuities earnings increased by 21% to USD 104 million, primarily as a result of higher fee income from higher account balances, more than off-setting higher sales-related expenses. Fixed annuity earnings declined to USD 61 million, driven by the reduction of the portfolio as the business is being de-emphasized. Earnings from retail mutual funds increased to USD 7 million, as the positive impact of higher account balances was partly offset by increased non-deferrable sales-related expenses.

•

Employer Solutions & Pensions earnings increased 14% to USD 89 million, resulting from the positive effect of higher average account balances, partly offset by higher hedging costs for stable value solutions.

•

Earnings from Canada declined to USD 12 million, as the second quarter of 2012 included favorable one-time items of USD 6 million.

Net income

Net income from Aegon’s businesses in the Americas declined to USD 222 million in the second quarter. Higher underlying earnings and lower impairments were more than offset by a sharp decline in the results from fair value items and lower realized gains.

The loss on fair value hedges without an accounting match under IFRS amounted to USD 157 million in the second quarter of 2013. The main drivers were rising equity markets, increased equity market volatility, but also higher interest rates. Fair value hedging with an accounting match, which include the hedges on Aegon’s GMWB variable annuities block, contributed USD 13 million to earnings.

Alternative asset performance was USD 43 million below the expected return, mainly driven by lower hedge fund and real estate returns.

Gains on investments of USD 38 million were realized as a result of normal trading activity. Impairments remained low in the current benign credit environment, declining to USD 41 million for the quarter. Impairments were primarily recorded on investments in non-housing related asset-backed securities and subprime residential mortgage-backed securities.

The results of run-off businesses increased to USD 17 million, mainly driven by improved results in the life reinsurance business.

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Return on capital

In the second quarter of 2013, the return on average capital, excluding revaluation reserves and defined benefit plan remeasurements, amounted to 7.1%. Excluding the capital allocated to the run-off businesses, return on capital amounted to 8.2%. The return on capital of Aegon’s businesses excludes the benefit of leverage at the holding.

Operating expenses

Operating expenses increased 5% to USD 488 million, mainly due to USD 9 million of higher sales-related expenses and USD 9 million of higher employee-related costs.

Sales

New life sales were stable at USD 162 million as growth, particularly in term life, was offset by lower universal life sales due to product withdrawals and product redesign as a result of focus on value creation. New premium production for accident and health insurance declined 8% to USD 207 million, driven by the loss of two distribution partners for travel insurance and the termination of certain affinity marketing partnerships.

Gross deposits amounted to USD 8.4 billion. Gross deposits in variable annuities and retail mutual funds were up by 64% compared to the second quarter of 2012. Variable annuities gross deposits increased 73%, mainly driven by the competitive environment which continues to be affected by a number of large competitors scaling back as well as our continued focus on key distribution partners. New variable annuity distribution arrangements continue to be added, including a recent distribution agreement with Edward Jones, one of the leading brokerage firms in the United States. Retirement plan deposits were up 4% compared to the same quarter of 2012, and continued to benefit from the focus on retirement readiness by growing customer participation and contributions through auto enrollment and auto escalation. Gross deposits in stable value solutions of USD 0.3 billion were down as stable value balances are targeted to be maintained around current levels.

Net deposits, excluding run-off businesses, grew strongly to USD 1.5 billion in the second quarter. Aegon’s core growth areas of variable annuities and pensions each recorded net inflows of USD 1.3 billion. Net flows into retail mutual funds improved to USD 0.2 billion, led by strong sales growth and lower outflow from equity funds. Net deposits in stable value solutions remained negative as the business targeted maintaining stable value assets at current levels. Aegon is de-emphasizing sales of fixed annuities as part of a strategic repositioning and incurred net outflows of USD 0.6 billion in the second quarter.

Market consistent value of new business

The market consistent value of new business more than doubled to USD 150 million in the second quarter of 2013, driven by improvements in variable annuities and life products. The former was driven primarily by higher sales volumes during the second quarter, while margins increased modestly. The improvement in life insurance is primarily the result of re-pricing and withdrawing certain products, including universal life products with secondary guarantees.

Revenue-generating investments

Revenue-generating investments amounted to USD 341 billion at the end of the second quarter, down 1% compared with the end of the first quarter of 2013. Investments for account of policyholders and off balance sheet investments for third parties were up by 1%, as net inflows were partially offset by lower bond markets. The general account assets decreased as a result of outflows from the run-off businesses and fixed annuities, as well as the negative market impact from higher interest rates.

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Americas ^c)


USD millions	Notes		Q2 2013			Q1 2013			%			Q2 2012			%			YTD 2013			YTD 2012			%
Underlying earnings before tax by line of business
Life and protection				195			160			22			197			(1	)		355			346			3
Fixed annuities				61			56			9			63			(3	)		117			126			(7	)
Variable annuities				104			102			2			86			21			206			184			12
Retail mutual funds				7			5			40			5			40			12			10			20

Individual savings and retirement products				172			163			6			154			12			335			320			5
Employer solutions & pensions				89			82			9			78			14			171			150			14
Canada				12			6			100			18			(33	)		18			25			(28	)
Latin America				1			2			(50	)		2			(50	)		3			5			(40	)

Underlying earnings before tax				469			413			14			449			4			882			846			4

Fair value items				(190	)		(307	)		38			(103	)		(84	)		(497	)		(20	)		—
Realized gains / (losses) on investments				38			62			(39	)		70			(46	)		100			82			22
Impairment charges				(41	)		1			—			(50	)		18			(40	)		(89	)		55
Other income / (charges)				(2	)		(6	)		67			(2	)		—			(8	)		(3	)		(167	)
Run- off businesses				17			(18	)		—			9			89			(1	)		6			—

Income before tax				291			145			*101*			373			*(22*	)		436			822			*(47*	)
Income tax				(69	)		—			—			(89	)		22			(69	)		(163	)		58

Net income				222			145			53			284			*(22*	)		367			659			*(44*	)

Net underlying earnings				336			295			14			329			2			631			611			3

Commissions and expenses				1,096			1,062			3			1,214			(10	)		2,158			2,255			(4	)
of which operating expenses				488			491			(1	)		463			5			979			927			6

New life sales		12
Life single premiums				20			44			(55	)		62			(68	)		64			127			(50	)
Life recurring premiums annualized				160			141			13			156			3			301			306			(2	)

Total recurring plus 1/10 single				162			145			12			162			—			307			319			(4	)

Life & protection				133			119			12			134			(1	)		252			267			(6	)
Canada				17			16			6			15			13			33			29			14
Latin America				12			10			20			13			(8	)		22			23			(4	)

Total recurring plus 1/10 single				162			145			12			162			—			307			319			(4	)

New premium production accident and health insurance				207			264			(22	)		225			(8	)		471			456			3

Gross deposits (on and off balance) by line of business		12
Life & protection				1			2			(50	)		3			(67	)		3			6			(50	)
Fixed annuities				136			189			(28	)		77			77			325			168			93
Variable annuities				2,251			1,622			39			1,304			73			3,873			2,518			54
Retail mutual funds				1,224			1,187			3			812			51			2,411			1,566			54

Individual savings & retirement products				3,611			2,998			20			2,193			65			6,609			4,252			55
Employer solutions & pensions				4,725			6,168			(23	)		6,278			(25	)		10,893			13,822			(21	)
Canada				30			47			(36	)		33			(9	)		77			107			(28	)
Latin America				5			6			(17	)		3			67			11			7			57

Total gross deposits				8,372			9,221			(9	)		8,510			(2	)		17,593			18,194			(3	)

Net deposits (on and off balance) by line of business		12
Life & protection				(12	)		(10	)		(20	)		(10	)		(20	)		(22	)		(20	)		(10	)
Fixed annuities				(608	)		(553	)		(10	)		(607	)		—			(1,161	)		(1,235	)		6
Variable annuities				1,304			699			87			449			190			2,003			812			147
Retail mutual funds				150			243			(38	)		88			70			393			57			—

Individual savings & retirement products				846			389			117			(70	)		—			1,235			(366	)		—
Employer solutions & pensions				803			1,841			(56	)		1,112			(28	)		2,644			2,909			(9	)
Canada				(96	)		(94	)		(2	)		(92	)		(4	)		(190	)		(197	)		4
Latin America				3			3			—			2			50			6			6			—

Total net deposits excluding run-off businesses				1,544			2,129			*(27*	)		942			64			3,673			2,332			58
Run-off businesses				(838	)		(1,416	)		41			(606	)		(38	)		(2,254	)		(2,125	)		(6	)

Total net deposits				706			713			(1	)		336			*110*			1,419			207			—

Revenue-generating investments


	Jun. 30,		Dec. 31,
	2013		2012		%
Revenue-generating investments (total)		340,890		333,759		2

Investments general account		107,039		113,988		(6	)
Investments for account of policyholders		92,832		86,975		7
Off balance sheet investments third parties		141,019		132,796		6

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THE NETHERLANDS

•

Underlying earnings before tax flat at EUR 74 million, as improvements in Life & Savings are offset by lower earnings in Pensions

•

Increase in net income to EUR 19 million, due to lower one-time charges

•

New life sales more than double to EUR 48 million as a result of strong pension sales

Underlying earnings before tax

Underlying earnings from Aegon’s operations in the Netherlands were stable at EUR 74 million as higher earnings in Life & Savings were offset by lower earnings in Pensions.

•

Earnings from Aegon’s Life & Savings operations in the Netherlands increased to EUR 59 million, up 13% compared to the second quarter of 2012. The positive effect of lower funding costs due to lower Euribor rates was partly offset by the impact of EUR 7 million of reduced policy charges on unit-linked products, as part of the acceleration of product improvements to unit-linked insurance policies.

•

Earnings from the Pension business declined to EUR 19 million, mainly due to higher claims related to morbidity.

•

Non-life recorded a loss of EUR 10 million, as an improvement in the profitability of disability products was offset by higher claims in the general insurance business. Management actions have been taken to improve the profitability of the general insurance business, including ending unprofitable proxy relationships and raising prices.

•

The distribution businesses recorded a profit of EUR 4 million, stable compared to the second quarter of 2012.

Net income

Net income from Aegon’s businesses in the Netherlands increased to EUR 19 million. Realized gains on investments totaled EUR 23 million and were the result of normal trading activity. Results on fair value items amounted to a loss of EUR 36 million, mainly driven by the negative market value movements on the rental residential real estate portfolio. Impairments of EUR 14 million were caused by the residential mortgage portfolio, partially driven by the increasing duration of arrears. Incurred losses on the mortgage portfolio did not show a significant increase in the second quarter.

Other charges included a provision of EUR 25 million related to the June verdict of the Supreme Court on the KoersPlan case, compared to a one-time charge of EUR 265 million before tax in the second quarter of 2012 that was related to the acceleration of product improvements for unit-linked insurance policies in the Netherlands.

Return on capital

The return on average capital, excluding revaluation reserves and defined benefit plan remeasurements, declined to 6.0%. Return on capital of Aegon’s businesses excludes the benefit of leverage at the holding.

Operating expenses

Operating expenses declined 3% to EUR 181 million, the result of the successful implementation of the cost reduction program.

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Sales

New life sales more than doubled in the second quarter to EUR 48 million. Pension sales increased strongly to EUR 38 million, as a result of a strong market proposition. Individual life sales declined 17% to EUR 10 million, primarily driven by a shrinking Dutch life insurance market as a result of the market wide switch to bank savings.

Production of mortgages in the second quarter of 2013 amounted to EUR 437 million, below the level achieved in the second quarter of 2012, as new production was intentionally scaled back. Premium production for accident and health insurance amounted to EUR 4 million, stable compared to the second quarter of 2012. General insurance production amounted to EUR 6 million, down 14% compared to the second quarter of 2012.

Gross deposits decreased to EUR 327 million, as customers in the Dutch savings market were less active in transferring their assets.

Market consistent value of new business

The market consistent value of new business in the Netherlands amounted to EUR 42 million, up 40% compared to the second quarter of 2012. This increase was driven by higher pension sales and higher contributions from mortgages.

Revenue-generating investments

Revenue-generating investments amounted to EUR 69 billion, down 2% compared with the previous quarter.

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The Netherlands


EUR millions	Notes	Q2 2013			Q1 2013			%			Q2 2012			%			YTD 2013			YTD 2012			%
Underlying earnings before tax by line of business
Life and Savings			59			67			(12	)		52			13			126			109			16
Pensions			19			13			46			27			(30	)		32			48			(33	)
Non-life			(10	)		(1	)		—			(11	)		9			(11	)		(15	)		27
Distribution			4			6			(33	)		4			—			10			11			(9	)
Share in underlying earnings before tax of associates			2			—			—			2			—			2			2			—

Underlying earnings before tax			74			85			*(13*	)		74			—			159			155			3

Fair value items			(36	)		(73	)		51			134			—			(109	)		168			—
Realized gains / (losses) on investments			23			63			(63	)		(6	)		—			86			28			—
Impairment charges			(14	)		(8	)		(75	)		(3	)		—			(22	)		(6	)		—
Other income / (charges)			(27	)		—			—			(266	)		90			(27	)		(269	)		90

Income before tax			20			67			*(70*	)		(67	)		—			87			76			14
Income tax			(1	)		(8	)		88			27			—			(9	)		21			—

Net income			19			59			*(68*	)		(40	)		—			78			97			*(20*	)

Net underlying earnings			57			65			*(12*	)		59			(3	)		122			123			(1	)

Commissions and expenses			254			252			1			265			(4	)		506			532			(5	)
of which operating expenses			181			179			1			186			(3	)		360			370			(3	)

New life sales
Life single premiums			389			346			12			146			166			735			391			88
Life recurring premiums annualized			10			5			100			9			11			15			16			(6	)

Total recurring plus 1/10 single			48			40			20			23			*109*			88			55			60

Life and Savings			10			14			(29	)		12			(17	)		24			30			(20	)
Pensions			38			26			46			11			—			64			25			156

Total recurring plus 1/10 single			48			40			20			23			*109*			88			55			60

New premium production accident and health insurance			4			13			(69	)		4			—			17			13			31
New premium production general insurance			6			8			(25	)		7			(14	)		14			16			(13	)

Gross deposits (on and off balance) by line of business
Life and Savings			327			404			(19	)		367			(11	)		731			927			(21	)

Total gross deposits			327			404			*(19*	)		367			*(11*	)		731			927			*(21*	)

Net deposits (on and off balance) by line of business
Life and Savings			85			(134	)		—			(66	)		—			(49	)		(251	)		80

Total net deposits			85			(134	)		—			(66	)		—			(49	)		(251	)		80

Revenue-generating investments


	Jun. 30, 2013		Dec. 31, 2012		%
Revenue-generating investments (total)		68,873		69,205		—

Investments general account		44,013		43,059		2
Investments for account of policyholders		23,839		25,094		(5	)
Off balance sheet investments third parties		1,021		1,052		(3	)

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UNITED KINGDOM

•

Underlying earnings before tax up to GBP 23 million due to favorable mortality and claims experience

•

Net loss of GBP 3 million includes business transformation costs and the divestment of Positive Solutions

•

New life sales up 45% to GBP 247 million, driven by auto enrollment and strong platform, and group pensions sales

•

Distribution deals with Mercer in the large client and SME workplace savings market; Platform grows at over GBP 100 million a month

Underlying earnings before tax

Underlying earnings before tax from Aegon’s operations in the UK increased to GBP 23 million in the second quarter, driven by favorable mortality and claims experience in Life.

•

Earnings from Life increased to GBP 23 million, driven by improved mortality in annuities and favorable claims experience in individual protection. In addition, earnings benefited from lower expenses and higher interest income as allocated capital increased.

•

Earnings from Pensions declined to nil. The negative effect from adverse persistency, which the UK insurance industry is experiencing as a result of the implementation of the Retail Distribution Review (RDR), amounted to GBP 8 million in the second quarter. This adverse effect is expected to wear off in the second half of 2013. Earnings in the second quarter were also negatively impacted by lower fee income. The fee margin is declining as the older business matures and clients are upgraded to the platform. This new business generates lower fee margins as commission is no longer paid and recovered through fee revenues, which will be offset by the consolidation of assets from other sources and lower expenses as the platform is more cost efficient. These negative impacts were partially compensated by the favorable impact of higher equity markets compared to the second quarter of 2012.

•

Earnings from Distribution are no longer reported separately. Positive Solutions has been sold and Origen was moved into the Pensions line of business, as it is being transformed into a tied agent network following the introduction of RDR.

Net income

The net loss amounted to GBP 3 million, driven by charges of GBP 27 million related to further restructuring as part of Aegon UK’s transformation into a platform-driven business, and a GBP 18 million book loss on the sale of Positive Solutions. Business transformation costs in the second quarter of 2013 were mostly related to the closing of multiple traditional sales offices. The business transformation is expected to continue into 2014, as part of the strategy to transform Aegon’s operations in the United Kingdom into a platform business, which includes upgrading existing customers to the platform. This is expected to increase revenues through consolidating customer assets and to further result in cost efficiencies.

Impairments were GBP 13 million, driven by a single corporate exposure. Realized gains amounted to GBP 23 million, resulting from the switch to high quality corporate credit from UK Gilts.

Return on capital

The return on average capital, excluding revaluation reserves and defined benefit plan remeasurements, increased to 3.8% in the second quarter of 2013. This was primarily due to higher net underlying earnings.

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Operating expenses

Operating expenses for the second quarter of 2013 increased 43% to GBP 97 million, as business transformation costs of GBP 27 million were incurred. Excluding these costs, expenses were stable compared to the second quarter of 2012.

Sales New

life sales were up 45% to GBP 247 million compared to the second quarter of 2012, reflecting the launch of income drawdown products on the platform, the benefit of auto enrollment and strong sales in group pensions. Platform sales continued to accelerate during the second quarter of 2013, with growth exceeding GBP 100 million a month as more than 900 advisory firms have been signed up.

Gross deposits continued to grow and amounted to GBP 62 million, mainly driven by platform savings products, as the platform gained momentum in the market. In July, Aegon was appointed by Mercer to become one of three preferred suppliers for its large-client workplace savings service, Mercer Workplace Savings. In addition, Aegon will become the only supplier for Mercers Elect, which focuses on the SME workplace savings market. These appointments further broaden Aegon’s distribution network and highlights the strong competitive positioning of the Aegon Retirement Choices platform.

Market consistent value of new business

The market consistent value of new business in the UK amounted to GBP 17 million, as lower pension margins were offset by higher sales volumes.

Revenue-generating investments

Revenue-generating investments declined to GBP 56 billion, down 3% compared to the end of the first quarter of 2013, primarily as a result of lower equity markets and higher interest rates.

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United Kingdom


GBP millions	Notes		Q2 2013			Q1 2013			%			Q2 2012			%			YTD 2013			YTD 2012			%
Underlying earnings before tax by line of business
Life				23			17			35			15			53			40			30			33
Pensions				—			5			—			7			—			5			18			(72	)
Distribution				—			(2	)		—			—			—			(2	)		(1	)		(100	)

Underlying earnings before tax				23			20			15			22			5			43			47			(9	)

Fair value items				(1	)		(2	)		50			(1	)		—			(3	)		(3	)		—
Realized gains / (losses) on investments				23			1			—			28			(18	)		24			28			(14	)
Impairment charges				(13	)		—			—			—			—			(13	)		—			—
Other income / (charges)		7		(43	)		4			—			10			—			(39	)		15			—

Income before tax				(11	)		23			—			59			—			12			87			*(86*	)
Income tax attributable to policyholder return				2			(6	)		—			(11	)		—			(4	)		(16	)		75

Income before income tax on shareholders return				(9	)		17			—			48			—			8			71			*(89*	)
Income tax on shareholders return				6			(2	)		—			(8	)		—			4			8			(50	)

Net income				(3	)		15			—			40			—			12			79			*(85*	)

Net underlying earnings				25			18			39			20			25			43			60			*(28*	)

Commissions and expenses				180			151			19			145			24			331			286			16
of which operating expenses				97			69			41			68			43			166			129			29

New life sales		8
Life single premiums				913			820			11			592			54			1,733			1,192			45
Life recurring premiums annualized				156			162			(4	)		111			41			318			229			39

Total recurring plus 1/10 single				247			244			1			170			45			491			348			41

Life				15			15			—			17			(12	)		30			34			(12	)
Pensions				232			229			1			153			52			461			314			47

Total recurring plus 1/10 single				247			244			1			170			45			491			348			41

Gross deposits (on and off balance) by line of business
Variable annuities				3			2			50			7			(57	)		5			14			(64	)
Pensions				59			40			48			—			—			99			—			—

Total gross deposits				62			42			48			7			—			104			14			—

Net deposits (on and off balance) by line of business
Variable annuities				(10	)		(5	)		(100	)		(1	)		—			(15	)		(2	)		—
Pensions				58			39			49			—			—			97			—			—

Total net deposits				48			34			41			(1	)		—			82			(2	)		—

Revenue-generating investments


	Jun. 30,		Dec. 31,
	2013		2012		%
Revenue-generating investments (total)		56,000		54,533		3

Investments general account		8,939		9,196		(3	)
Investments for account of policyholders		46,950		45,329		4
Off balance sheet investments third parties		111		8		—

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NEW MARKETS

•

Underlying earnings before tax decline 19% to EUR 52 million mainly driven by divestments in Spain and a lower non-life result in CEE

•

Net income up to EUR 143 million driven by the EUR 102 million book gain on the sale of the stake in the joint venture with Unnim

•

New life sales decline to EUR 56 million as continued strong performance in Asia is offset by the effect of divestments in Spain and lower sales in Poland

•

Gross deposits at Aegon Asset Management more than doubled to EUR 5.5 billion on back of higher institutional sales in the United States and the Netherlands

Underlying earnings before tax

In New Markets, Aegon’s underlying earnings before tax declined 19% to EUR 52 million. Divestments in Spain and a lower non-life result in Central & Eastern Europe were partly offset by higher earnings from Aegon Asset Management.

•

Earnings from Central & Eastern Europe declined 52% to EUR 10 million, driven by a lower non-life result in Hungary as a result of adverse claim experience from storms and floods which occurred in Central Europe in the second quarter of 2013. In addition, the introduction of the insurance tax in Hungary had a negative impact of EUR 2 million.

•

Results from Aegon’s operations in Asia declined to EUR 4 million as the positive impact of the growth of the business was offset by an exchange loss of EUR 2 million on a reinsurance settlement and higher non-deferred acquisition costs resulting from the strong growth in variable annuities production in Japan.

•

Earnings from Spain & France decreased 41% to EUR 10 million due to the divestment of the joint ventures with Cívica and Unnim, the latter being derecognized as of May 2013. The comparable quarter of 2012 included underlying earnings of EUR 4 million from the joint venture with Cívica, while the joint venture with Unnim contributed EUR 4 million as compared to EUR 1 million in the second quarter of 2013. Aegon’s new joint venture with Banco Santander, included in earnings from June 2013, has had a negligible impact on earnings. Earnings from France partner La Mondiale were up to EUR 7 million compared to the same quarter of 2012.

•

Results from Variable Annuities Europe amounted to EUR 2 million. The growth of the business more than compensated for costs to position the company for future growth.

•

Earnings from Aegon Asset Management increased 13% to EUR 26 million, as the positive impact of higher third party asset balances and performance fees was greater than the loss of earnings caused by the sale of its stake in US hedge fund manager Prisma in the fourth quarter of 2012.

In June 2013, the Polish government began a consultation process over an overhaul of the Polish state pension system. While the outcome of this process is currently unknown, any changes to the state pension system in Poland may affect Aegon’s Polish pension business and the company’s valuation of this business. At June 30, 2013, intangible assets relating to Aegon’s pension business in Poland amounted to EUR 188 million.

Net income

Net income from Aegon’s operations in New Markets increased to EUR 143 million, due primarily to the gain of EUR 102 million on the sale of the joint venture with Unnim. Impairments amounted to a positive EUR 4 million, due the positive impact of the strengthening of the Hungarian Forint on the Hungarian foreign currency mortgage portfolio. This was offset by a negative result in fair value items on the currency hedge set up to protect this portfolio.

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Return on capital

The return on average capital, excluding revaluation reserves and defined benefit plan remeasurements, declined to 5.8%, mainly the result of lower net underlying earnings. Return on capital of Aegon’s businesses excludes the benefit of leverage at the holding.

Operating expenses

Operating expenses increased 5% to EUR 161 million in the second quarter, due to the higher costs of investments to support future growth in Asia, and the impact of the new insurance tax in Hungary.

Sales

New life sales declined 18% to EUR 56 million. On a comparable basis, excluding the impact of the divestments in Spain, new life sales were stable compared to the second quarter of 2012.

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In Central & Eastern Europe, new life sales declined 10% to EUR 26 million. Sales growth in Turkey and Slovakia due to improved distribution was more than offset by lower sales in Poland resulting from reduced production in the broker channel.

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In Asia, new life sales increased 27% to EUR 19 million. This was mainly driven by the launch of a new universal life product in the first quarter of 2013 and the expanded cooperation with a number of private banks.

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New life sales in Spain declined to EUR 11 million driven by the divestment of partnerships in Spain. Sales from the new joint venture with Santander, which were included as from June 2013, accounted for EUR 2 million of the new life sales in the second quarter of 2013.

New premium production from accident and health insurance business improved significantly to EUR 10 million, driven mainly by Aegon’s direct marketing unit in Asia. New premium production from Aegon’s general insurance business in Central & Eastern Europe was EUR 8 million.

Gross deposits in New Markets amounted to EUR 5.9 billion, more than double compared to the second quarter of 2012. Gross deposits in Aegon Asset Management strongly increased to EUR 5.5 billion. This development was driven by all geographies, of which especially institutional sales in the United States and the Netherlands were higher than in the second quarter of 2012. Strong sales of variable annuities in Japan saw gross deposits in Asia more than quadruple to EUR 160 million.

Market consistent value of new business

The market consistent value of new business in New Markets increased 32% to EUR 25 million. Asia showed a strong improvement over the second quarter of 2012 due to higher margins and increased sales. This outweighed the negative impact of the divestments of the stakes in the joint ventures with Cívica and Unnim in Spain.

Revenue-generating investments

Revenue-generating investments decreased 2% during the second quarter of 2013 to EUR 69 billion, mainly driven by negative market effects resulting from higher interest rates.

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New Markets ^c)


EUR millions	Notes		Q2 2013			Q1 2013			%			Q2 2012			%			YTD 2013			YTD 2012			%
Underlying earnings before tax
Central Eastern Europe				10			16			(38	)		21			(52	)		26			44			(41	)
Asia				4			11			(64	)		5			(20	)		15			14			7
Spain & France				10			11			(9	)		17			(41	)		21			42			(50	)
Variable Annuities Europe				2			1			100			(2	)		—			3			—			—
Aegon Asset Management				26			23			13			23			13			49			52			(6	)

Underlying earnings before tax				52			62			*(16*	)		64			*(19*	)		114			152			*(25*	)

Fair value items				(8	)		(3	)		(167	)		(12	)		33			(11	)		(5	)		(120	)
Realized gains / (losses) on investments				1			2			(50	)		3			(67	)		3			5			(40	)
Impairment charges				4			(10	)		—			—			—			(6	)		(4	)		(50	)
Other income / (charges)				106			(4	)		—			—			—			102			(18	)		—

Income before tax				155			47			—			55			*182*			202			130			55
Income tax				(12	)		(17	)		29			(18	)		33			(29	)		(45	)		36

Net income				143			30			—			37			—			173			85			*104*

Net income / (loss) attributable to:
Equity holders of Aegon N.V.				142			30			—			37			—			172			85			102
Non-controlling interests				1			—			—			—			—			1			—			—

Net underlying earnings				38			39			(3	)		44			*(14*	)		77			103			*(25*	)

Commissions and expenses				234			228			3			219			7			462			427			8
of which operating expenses				161			157			3			154			5			318			297			7

New life sales		12
Life single premiums				175			147			19			142			23			322			288			12
Life recurring premiums annualized				39			48			(19	)		53			(26	)		87			119			(27	)

Total recurring plus 1/10 single				56			63			*(11*	)		68			*(18*	)		119			148			*(20*	)

Life				55			62			(11	)		66			(17	)		117			141			(17	)
Associates				1			1			—			2			(50	)		2			7			(71	)

Total recurring plus 1/10 single				56			63			*(11*	)		68			*(18*	)		119			148			*(20*	)

Central Eastern Europe				26			28			(7	)		29			(10	)		54			56			(4	)
Asia				19			18			6			15			27			37			30			23
Spain & France				11			17			(35	)		24			(54	)		28			62			(55	)

Total recurring plus 1/10 single				56			63			*(11*	)		68			*(18*	)		119			148			*(20*	)

New premium production accident and health insurance				10			12			(17	)		7			43			22			17			29
New premium production general insurance				8			6			33			6			33			14			11			27

Gross deposits (on and off balance)		12
Central Eastern Europe				57			57			—			66			(14	)		114			182			(37	)
Asia				160			95			68			37			—			255			71			—
Spain & France				1			7			(86	)		11			(91	)		8			21			(62	)
Variable Annuities Europe				110			122			(10	)		109			1			232			229			1
Aegon Asset Management				5,527			2,282			142			2,514			120			7,809			5,317			47

Total gross deposits				5,855			2,563			*128*			2,737			*114*			8,418			5,820			45

Net deposits (on and off balance)		12
Central Eastern Europe				39			(35	)		—			(18	)		—			4			24			(83	)
Asia				152			70			117			36			—			222			67			—
Spain & France				(3	)		(3	)		—			(11	)		73			(6	)		(37	)		84
Variable Annuities Europe				(2	)		(14	)		86			7			—			(16	)		35			—
Aegon Asset Management				2,047			127			—			605			—			2,174			1,894			15

Total net deposits				2,233			145			—			619			—			2,378			1,983			20

Revenue-generating investments


	Jun. 30, 2013		Dec. 31, 2012		%
Revenue-generating investments (total)		69,007		68,733		—

Investments general account		3,290		3,408		(3	)
Investments for account of policyholders		5,862		6,024		(3	)
Off balance sheet investments third parties		59,855		59,301		1

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Market consistent value of new business


	MCVNB												MCVNB
EUR millions, after tax	Q2 2013		Q1 2013		%			Q2 2012		%			YTD 2013		YTD 2012		%
Americas		114		95		20			46		148			209		93		125
The Netherlands		42		95		(56	)		30		40			137		57		140
United Kingdom		21		21		—			22		(5	)		42		49		(14	)
New Markets		25		21		19			19		32			46		43		7

Total		202		232		*(13*	)		117		73			434		242		79

Modeled new business, APE and deposits


			Premium business												Premium business
			APE												APE
EUR millions	Notes		Q2 2013		Q1 2013		%			Q2 2012		%			YTD 2013		YTD 2012		%
		9
Americas				279		305		(9	)		281		(1	)		584		561		4
The Netherlands				75		88		(15	)		73