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
November 2013
AEGON N.V.
Aegonplein 50
2591 TV THE HAGUE
The Netherlands
Aegons press release, dated November 7, 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: November 7, 2013 | By | /s/ E. Lagendijk ------------------------------------------------------------ E. Lagendijk | ||
Executive Vice President and | ||||
General Counsel |
Q3 2013 Results
The Hague November 7, 2013
Aegon delivers higher underlying earnings, sales and value of new business
Net income impacted by changes to economic assumptions
¡ | Solid growth in underlying earnings before tax |
| Underlying earnings up 7%, driven by business growth, higher equity markets, favorable mortality and actuarial assumption updates, and partly offset by unfavorable currency exchange rates |
| Fair value items loss of EUR 493 million, mainly as a result of aligning economic assumptions related to interest rates, bond fund and equity market returns with current market conditions |
| Net income amounts to EUR 227 million, mainly impacted by fair value losses |
| Return on equity amounts to 9.9% as a result of higher underlying earnings and one-time tax benefits |
¡ | Sales growth mainly driven by higher variable annuity and pension deposits |
| New life sales increase 2% to EUR 412 million, driven by pension sales in the UK |
| Gross deposits up 17% to EUR 11.0 billion, driven by variable annuities and pensions in US |
| Net deposits, excluding run-off businesses, more than double to EUR 3.4 billion |
| Accident & health sales decrease 12% to EUR 167 million due to the termination of certain distribution partnerships earlier this year and unfavorable currency exchange rates |
| Market consistent value of new business increases significantly to EUR 285 million, as a result of higher interest rates, increased sales volumes and management actions to improve margins |
¡ | Capital position remains strong; cash flows compressed by one-time items |
| Solvency ratio of 208%, reflecting move to swap curve for Dutch solvency calculation |
| Holding excess capital at EUR 1.8 billion |
| Operational free cash flows of EUR 88 million, impacted by market movements and one-time items |
Statement of Alex Wynaendts, CEO
A further increase in underlying earnings and sales this quarter, and a sharp rise in the value of new business, were primarily the result of management actions and favorable market conditions. Net income was impacted, mainly by Aegons decision to bring economic assumptions for interest rates and equity markets in line with market conditions. Aegon also maintained its strong capital position this quarter, a key element of our long-term strategy.
We accelerated the expansion of our digital distribution capabilities, reflecting our strategic focus on innovation at all levels of our company to connect more effectively with our customers in whatever ways they choose. Notable initiatives included the launch of direct-to-consumer propositions in Spain and Central & Eastern Europe we also reached more than GBP 1 billion in assets on our new innovative retirement platform in the United Kingdom, which launched just one year ago.
Our actions this quarter allow us to operate our business and serve our customers more effectively while maintaining the strength of our company in the long-term. Looking ahead, we are confident that the continued execution of our strategy and our strong capital position fully support our ambition to become a leader in each of our chosen markets.
Key performance indicators
|
||||||||||||||||||||||||||||||||||||
amounts in EUR millions b) | Notes
|
Q3 2013
|
Q2 2013
|
%
|
Q3 2012
|
%
|
YTD 2013
|
YTD 2012
|
%
|
|||||||||||||||||||||||||||
Underlying earnings before tax |
1 | 531 | 478 | 11 | 494 | 7 | 1,454 | 1,390 | 5 | |||||||||||||||||||||||||||
Net income |
2 | 227 | 243 | (7 | ) | 377 | (40 | ) | 674 | 1,151 | (41 | ) | ||||||||||||||||||||||||
Sales |
3 | 1,697 | 1,975 | (14 | ) | 1,550 | 9 | 5,410 | 4,912 | 10 | ||||||||||||||||||||||||||
Market consistent value of new business |
4 | 285 | 202 | 41 | 173 | 65 | 719 | 415 | 73 | |||||||||||||||||||||||||||
Return on equity |
5 | 9.9 | % | 6.7 | % | 48 | 8.0 | % | 24 | 7.6 | % | 7.3 | % | 4 |
Page 1 of 23
Media relations | Investor relations | |
Robin Boon | Willem van den Berg | |
+ 31 (0) 70 344 8956 | + 31 (0) 70 344 8305 | |
gcc@aegon.com | ir@aegon.com |
STRATEGIC HIGHLIGHTS
¡ | Additional steps taken to improve efficiency in the Americas and the holding |
¡ | Aegon Direct propositions launched in Spain, trials commence in several CEE countries |
¡ | Aegon Retirement Choices (ARC) platform in the UK surpasses GBP 1 billion in assets |
Aegons ambition
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; Deliver operational excellence; Enhance customer loyalty; and Empower employees. These provide the strategic framework for the companys 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
Aegon is introducing variable annuity products and expertise to the German market. This builds on Aegons experience and best practices gained elsewhere in the group, including the United States, where variable annuities are a significant business.
Aegon continually reviews each of its businesses for strategic fit and return prospects, and, as part of this review, announced the sale of its Czech pension business this quarter. Exiting the pension business allows Aegon to focus more on the growing life insurance market in the Czech Republic which better aligns with Aegons desired risk profile and return requirements.
The Aegon Retirement Choices (ARC) platform in the UK continues to draw praise, recently winning Best new platform and Best use of platform technology at the Aberdeen UK Platform awards. The platform has achieved unprecedented growth, now exceeding GBP 1 billion of assets under administration.
Deliver operational excellence
Aegons continued focus on cost efficiency is evident with the implementation of operational improvements in the Americas and at the holding. The operational improvements at the holding were initiated in October and are aimed at improving the service to stakeholders, while reducing expenses. In the Americas, Aegon has begun to execute on a restructuring program aimed at creating a broad range of synergies. A first important step was taken toward this objective with the creation of a new division, Enterprise Business Services (EBS) - a shared services group which has as its primary purpose to bring together common back office functions and processes. This will enable the core businesses to focus on delivering a quality customer experience, achieving their strategic priorities, and developing innovative solutions, in addition to generating considerable cost reductions. Moreover, EBS has also identified opportunities to source certain professional functions that support Aegons businesses to external providers who are able to deliver those same services at a lower cost.
Enhance customer loyalty
Aegon believes that creating a customer-centric culture will enable it to grow further by responding to changing markets and customer behaviors. A key element of Aegons strategy is to get closer to its customers by increased deployment of technology at all levels of the organization. The Aegon Direct initiative was launched in Spain this quarter, and began trials in several Central & Eastern European (CEE) countries. Aegon Direct allows clients to research, obtain a quote for, and purchase insurance products online.
Recent survey results from the Hungarian Financial Supervisory Authority show that Aegon clients are the countrys most satisfied bank and insurance clients. This follows a concerted two-year effort to actively address customer complaints and adjust products based on customer feedback.
Page 2 of 23
The Transamerica Center for Retirement Studies (TCRS) celebrated its 10-year anniversary by expanding to create the Transamerica Institute, including the new Transamerica Center for Health Studies. TCRS helps people, employers and policymakers to better understand retirement. The expansion aims to bring more clarity to navigating the financial implications of health coverage decisions in the United States.
Empower employees
Aegon continues to implement initiatives to help employees better understand how they contribute to Aegons strategy. In Spain, Aegon has launched the Customer Voices program that appoints employees to be the customer voice or advocate in the organization. An early result of this program has been an improved client welcome process which now includes a personal letter and welcome phone call and a follow-up package with further information about the company.
In the United States, hundreds of Transamericas employees from across the country participated in the Healthy 4.01k walk. Sponsored by Transamericas Employer Solutions & Pensions division, this program reminded employees to walk the talk for retirement readiness. Aegon believes this initiative, and others similar to it, will help its employees better relate to customers, increasing customer brand loyalty and strengthening its market position.
Page 3 of 23
Financial overview c)
|
||||||||||||||||||||||||||||||||||||
EUR millions | Notes | Q3 2013 | Q2 2013 | % | Q3 2012 | % | YTD 2013 | YTD 2012 | % | |||||||||||||||||||||||||||
Underlying earnings before tax |
||||||||||||||||||||||||||||||||||||
Americas |
371 | 360 | 3 | 362 | 2 | 1,043 | 1,014 | 3 | ||||||||||||||||||||||||||||
The Netherlands |
85 | 74 | 15 | 85 | - | 244 | 240 | 2 | ||||||||||||||||||||||||||||
United Kingdom |
26 | 27 | (4 | ) | 27 | (4 | ) | 77 | 83 | (7 | ) | |||||||||||||||||||||||||
New markets |
74 | 52 | 42 | 70 | 6 | 188 | 222 | (15 | ) | |||||||||||||||||||||||||||
Holding and other |
(25 | ) | (35 | ) | 29 | (50 | ) | 50 | (98 | ) | (169 | ) | 42 | |||||||||||||||||||||||
Underlying earnings before tax |
531 | 478 | 11 | 494 | 7 | 1,454 | 1,390 | 5 | ||||||||||||||||||||||||||||
Fair value items |
(493 | ) | (270 | ) | (83 | ) | (142 | ) | - | (1,049 | ) | 88 | - | |||||||||||||||||||||||
Realized gains / (losses) on investments |
202 | 82 | 146 | 128 | 58 | 397 | 258 | 54 | ||||||||||||||||||||||||||||
Impairment charges |
(45 | ) | (57 | ) | 21 | (35 | ) | (29 | ) | (119 | ) | (118 | ) | (1 | ) | |||||||||||||||||||||
Other income / (charges) |
(42 | ) | 27 | - | 3 | - | (19 | ) | (268 | ) | 93 | |||||||||||||||||||||||||
Run-off businesses |
1 | 13 | (92 | ) | 12 | (92 | ) | - | 17 | - | ||||||||||||||||||||||||||
Income before tax |
154 | 273 | (44 | ) | 460 | (67 | ) | 664 | 1,367 | (51 | ) | |||||||||||||||||||||||||
Income tax |
73 | (30 | ) | - | (83 | ) | - | 10 | (216 | ) | - | |||||||||||||||||||||||||
Net income |
227 | 243 | (7 | ) | 377 | (40 | ) | 674 | 1,151 | (41 | ) | |||||||||||||||||||||||||
Net income / (loss) attributable to: |
||||||||||||||||||||||||||||||||||||
Equity holders of Aegon N.V. |
227 | 242 | (6 | ) | 376 | (40 | ) | 673 | 1,150 | (41 | ) | |||||||||||||||||||||||||
Non-controlling interests |
- | 1 | - | 1 | - | 1 | 1 | - | ||||||||||||||||||||||||||||
Net underlying earnings |
495 | 361 | 37 | 383 | 29 | 1,179 | 1,067 | 10 | ||||||||||||||||||||||||||||
Commissions and expenses |
1,447 | 1,491 | (3 | ) | 1,361 | 6 | 4,355 | 4,300 | 1 | |||||||||||||||||||||||||||
of which operating expenses |
11 | 830 | 844 | (2 | ) | 777 | 7 | 2,478 | 2,342 | 6 | ||||||||||||||||||||||||||
New life sales |
||||||||||||||||||||||||||||||||||||
Life single premiums |
1,282 | 1,652 | (22 | ) | 1,125 | 14 | 4,425 | 3,353 | 32 | |||||||||||||||||||||||||||
Life recurring premiums annualized |
283 | 355 | (20 | ) | 293 | (3 | ) | 988 | 943 | 5 | ||||||||||||||||||||||||||
Total recurring plus 1/10 single |
412 | 520 | (21 | ) | 405 | 2 | 1,431 | 1,278 | 12 | |||||||||||||||||||||||||||
New life sales |
||||||||||||||||||||||||||||||||||||
Americas |
12 | 116 | 124 | (6 | ) | 126 | (8 | ) | 350 | 372 | (6 | ) | ||||||||||||||||||||||||
The Netherlands |
23 | 48 | (52 | ) | 25 | (8 | ) | 111 | 80 | 39 | ||||||||||||||||||||||||||
United Kingdom |
222 | 292 | (24 | ) | 206 | 8 | 800 | 630 | 27 | |||||||||||||||||||||||||||
New markets |
12 | 51 | 56 | (9 | ) | 48 | 6 | 170 | 196 | (13 | ) | |||||||||||||||||||||||||
Total recurring plus 1/10 single |
412 | 520 | (21 | ) | 405 | 2 | 1,431 | 1,278 | 12 | |||||||||||||||||||||||||||
New premium production accident and health insurance |
167 | 173 | (3 | ) | 190 | (12 | ) | 565 | 572 | (1 | ) | |||||||||||||||||||||||||
New premium production general insurance |
16 | 14 | 14 | 12 | 33 | 44 | 39 | 13 | ||||||||||||||||||||||||||||
Gross deposits (on and off balance) |
||||||||||||||||||||||||||||||||||||
Americas |
12 | 7,957 | 6,417 | 24 | 6,391 | 25 | 21,362 | 20,427 | 5 | |||||||||||||||||||||||||||
The Netherlands |
278 | 327 | (15 | ) | 275 | 1 | 1,009 | 1,202 | (16 | ) | ||||||||||||||||||||||||||
United Kingdom |
99 | 71 | 39 | 5 | - | 219 | 22 | - | ||||||||||||||||||||||||||||
New markets |
12 | 2,690 | 5,855 | (54 | ) | 2,755 | (2 | ) | 11,108 | 8,575 | 30 | |||||||||||||||||||||||||
Total gross deposits |
11,024 | 12,670 | (13 | ) | 9,426 | 17 | 33,698 | 30,226 | 11 | |||||||||||||||||||||||||||
Net deposits (on and off balance) |
||||||||||||||||||||||||||||||||||||
Americas |
12 | 2,576 | 1,185 | 117 | 904 | 185 | 5,374 | 2,703 | 99 | |||||||||||||||||||||||||||
The Netherlands |
(64 | ) | 85 | - | (480 | ) | 87 | (113 | ) | (731 | ) | 85 | ||||||||||||||||||||||||
United Kingdom |
80 | 53 | 51 | (6 | ) | - | 173 | (8 | ) | - | ||||||||||||||||||||||||||
New markets |
12 | 826 | 2,233 | (63 | ) | 1,208 | (32 | ) | 3,204 | 3,191 | - | |||||||||||||||||||||||||
Total net deposits excluding run-off businesses |
3,418 | 3,556 | (4 | ) | 1,626 | 110 | 8,638 | 5,155 | 68 | |||||||||||||||||||||||||||
Run-off businesses |
(485 | ) | (644 | ) | 25 | (301 | ) | (61 | ) | (2,202 | ) | (1,940 | ) | (14 | ) | |||||||||||||||||||||
Total net deposits |
2,933 | 2,912 | 1 | 1,325 | 121 | 6,436 | 3,215 | 100 | ||||||||||||||||||||||||||||
Revenue-generating investments
|
||||||||||||||||||||||||||||||||||||
|
Sept. 30, 2013 |
|
|
Jun. 30, 2013 |
|
% | |
Dec. 31, 2012 |
|
% | ||||||||||||||||||||||||||
Revenue-generating investments (total) |
468,973 | 465,772 | 1 | 459,077 | 2 | |||||||||||||||||||||||||||||||
Investments general account |
137,419 | 140,388 | (2 | ) | 145,021 | (5 | ) | |||||||||||||||||||||||||||||
Investments for account of policyholders |
161,165 | 155,893 | 3 | 152,968 | 5 | |||||||||||||||||||||||||||||||
Off balance sheet investments third parties |
170,389 | 169,491 | 1 | 161,088 | 6 |
Page 4 of 23
OPERATIONAL HIGHLIGHTS
Underlying earnings before tax
Aegons underlying earnings before tax in the third quarter of 2013 increased 7% to EUR 531 million compared to the third quarter of 2012. Business growth, the positive effects of favorable equity markets (EUR 33 million) and favorable mortality in the Americas (EUR 15 million), more than offset the loss of earnings due to the sale of the companys interests in partnerships in Spain and Asset Management (EUR 12 million) and the impact of unfavorable currency exchange rates (EUR 23 million). In addition, actuarial assumption updates and model refinements amounted to EUR 27 million in the third quarter of 2013.
Underlying earnings from the Americas increased 2% compared to the third quarter of 2012 to EUR 371 million. This was mainly due to growth in Variable Annuities and Pensions, favorable mortality experience of EUR 15 million in Life & Protection, and a positive impact of EUR 5 million of actuarial assumption changes and model refinements. These gains were partly offset by unfavorable currency exchange rates.
In the Netherlands, underlying earnings were stable at EUR 85 million as an earnings recovery in Non-life and higher earnings in Pensions were offset by lower Life & Savings earnings due to the non-recurrence of a provision release of EUR 8 million booked in the third quarter of 2012.
Underlying earnings from Aegons operations in the United Kingdom amounted to EUR 26 million in the third quarter of 2013. The positive impact of higher equity markets was more than offset by investments in technology, adverse persistency of EUR 5 million, and unfavorable mortality experience and currency exchange rates. The effects of adverse persistency are expected to continue into the fourth quarter of 2013.
Underlying earnings from New Markets increased 6% to EUR 74 million, mainly due to the positive impact of actuarial assumption changes and model refinements of EUR 22 million in Asia in the third quarter of 2013, compared to EUR 7 million in the third quarter of 2012. Results in Spain were impacted by EUR 9 million as a result of the divestments of the joint ventures with Banca Cívica and Unnim, while earnings from Asset Management were impacted by EUR 3 million due to the divestment of hedge fund manager Prisma.
Total holding costs decreased 50% to EUR 25 million, mainly as a result of lower net interest costs following debt redemptions and lower operating expenses.
Net income
Net income decreased 40% to EUR 227 million as higher losses from fair value items were only partly offset by higher underlying earnings, increased realized gains and tax benefits.
Fair value items
The results from fair value items amounted to a loss of EUR 493 million. The loss was mainly driven by long-term economic assumption changes totaling EUR 405 million. Aegon reduced its annual equity market total return assumption from 9% to 8%, accounting for approximately EUR 135 million of the total. In addition, the long-term assumption for 10-year US Treasury yields was lowered by 50 basis points to 4.25%, while the grading period towards the long-term assumption was increased from 5 to 10 years for both the 10-year US Treasury yield assumption and the return assumption for separate account bond funds. The separate account bond funds return assumption is now set at 4% for 10 years, and 6% thereafter. These interest rate related adjustments accounted for approximately EUR 270 million of the total.
Page 5 of 23
The loss on fair value hedges without an accounting match under IFRS was EUR 116 million. This was mainly driven by the macro hedge in the Americas, on which the loss was EUR 95 million, as a result of the strong equity market performance in the third quarter of 2013. For similar reasons, the loss on the equity collar hedge was EUR 36 million.
Fair value hedging with an accounting match, which include the hedges on Aegons GMWB variable annuities block and the guarantees on general account products in the Netherlands, contributed EUR 31 million to earnings. Fair value investments outperformed by EUR 13 million, mainly driven by credit derivatives.
Realized gains on investments
In the third quarter, realized gains on investments increased 58% to EUR 202 million and were the result of adjustments to the asset mix in the investment portfolio in the Netherlands to bring it in line with the new regulatory yield curve, as well as normal trading activity.
Impairment charges
Impairments were up compared to last year and amounted to EUR 45 million. These largely related to impairments on structured assets in the Americas and a single corporate exposure in the United Kingdom, as well as residential mortgage loans in the Netherlands and Hungary.
Other income
Other income amounted to a loss of EUR 42 million. The negative impact of the intangibles write off related to the Polish pension fund business of EUR 182 million and restructuring charges in the Americas of EUR 27 million, were partly offset by a gain of EUR 74 million on the sale of the joint venture with CAM and a gain on the recapture of certain reinsurance contracts in the Americas of EUR 126 million.
Run-off businesses
The results of run-off businesses declined to EUR 1 million, mainly driven by lower spreads and unfavorable mortality in payout annuities.
Income tax
Income tax amounted to a benefit of EUR 73 million in the third quarter. The effective tax rate on underlying earnings for the third quarter of 2013 was 7%, mainly driven by a benefit in the United Kingdom from a reduction in the corporate tax rate from 23% to 20%.
Return on equity
Return on equity increased to 9.9% for the third quarter of 2013, driven by higher net underlying earnings, which included a one-time tax benefit in the United Kingdom. Return on equity for Aegons ongoing businesses, excluding the run-off businesses, amounted to 10.9% over the same period.
Operating expenses
In the third quarter, operating expenses increased 7% to EUR 830 million mainly due to the non-recurrence of a benefit plan release recorded in the third quarter of 2012, restructuring expenses in the Americas and higher variable annuities sales and employee performance related expenses related to the growth of the business in the Americas. On a comparable basis, operating expenses increased 4%. Approximately half of this increase was driven by additional investments in technology to support future growth, with the remainder mainly the result of the growth of the business in the Americas.
Page 6 of 23
Sales
Compared to the third quarter of 2012, Aegons total sales increased 9% to EUR 1.7 billion. New life sales were up by 2%, driven mainly by higher pension production in the United Kingdom, partly offset by unfavorable currency movements. In the Americas, new life sales were down 8%, primarily driven by adverse currency movements, as well as lower universal life sales due to product withdrawals and product redesign, resulting from the focus on value creation. Gross deposits increased 17%, with particular success in both the variable annuity and retirement business in the United States, partly offset by unfavorable currency movements. Net deposits, excluding run-off businesses, more than doubled to EUR 3.4 billion and were primarily driven by variable annuity and retirement deposits in the United States.
Market consistent value of new business
The market consistent value of new business increased strongly to EUR 285 million mainly as a result of strong sales growth and higher margins in the United States and a higher contribution from mortgage production in the Netherlands.
Revenue-generating investments
Revenue-generating investments increased 1% during the third quarter of 2013 to EUR 469 billion, driven by continued net inflows and higher equity markets, partly offset by unfavorable currency exchange rates.
Capital management
Shareholders equity decreased EUR 0.8 billion compared to the end of the second quarter of 2013 to EUR 20.3 billion at September 30, 2013. This was driven by unfavorable currency exchange rates and higher interest rates, resulting in lower revaluation reserves. The revaluation reserves declined by EUR 0.4 billion to EUR 3.4 billion. Aegons shareholders equity, excluding revaluation reserves and defined benefit plan remeasurements, amounted to EUR 17.8 billion. The gross leverage ratio improved to 30.1% in the third quarter, as outstanding commercial paper was reduced by EUR 0.2 billion. Excess capital in the holding decreased to EUR 1.8 billion, as proceeds of EUR 0.4 billion received from the divestment of the joint venture with CAM were more than offset by the payment of the interim dividend of EUR 0.2 billion, a net capital injection into Aegons operating units of EUR 0.2 billion and interest payments and operating expenses.
Shareholders equity per common share, excluding revaluation reserves and defined benefit plan remeasurements, amounted to EUR 8.42 at September 30, 2013.
At September 30, 2013, Aegons Insurance Group Directive (IGD) ratio decreased to 208%, driven by the switch to the swap curve for regulatory solvency calculations in the Netherlands and the payment of the 2013 interim dividend. The capital in excess of the S&P AA threshold in the United States increased by USD 0.1 billion to USD 0.9 billion, as earnings for the quarter were largely offset by additional tax charges. The IGD ratio, excluding Aegon Bank, in the Netherlands was flat at ~245%. The Pillar I ratio in the United Kingdom, including the with-profit fund, was ~140% at the end of the third quarter of 2013. This was up from ~130% at the end of the second quarter of 2013, mainly reflecting EUR 0.2 billion of capital received from the holding. As of this quarter, Aegon includes the with-profit fund in the reported Pillar I ratio, which is in line with the regulatory requirements in the United Kingdom.
On October 18, 2013, the Dutch Ministry of Finance shared the results of the impact study for Solvency 1.5 and started a consultation process on the final calibrations. Aegon does not expect Solvency 1.5 to have an impact on its capital policy.
Page 7 of 23
On October 15, 2013, Aegon completed the share buyback program announced on September 17, 2013, to neutralize the dilutive effect of the 2013 interim dividend paid in shares. Between September 17, 2013, and October 14, 2013, 19,047,358 common shares were repurchased under the share buyback program, at an average price of EUR 5.62 per share.
Cash flows
Operational free cash flows13) were EUR 88 million in the third quarter of 2013. Excluding one-time items of EUR (112) million and market impacts of EUR (91) million, operational free cash flows amounted to EUR 291 million. The one-items were primarily related to changes to regulatory requirements and tax charges. The impact of market movements during the third quarter mainly resulted from lower credit spreads in the United Kingdom and the tax impact of hedge losses in the Americas.
Aegon did not receive material dividends from its operating units during the third quarter of 2013.
Financial overview, Q3 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 |
162 | 59 | 20 | 38 | - | 279 | ||||||||||||||||||
Individual savings and retirement products |
138 | - | - | (4) | - | 134 | ||||||||||||||||||
Pensions |
69 | 27 | 6 | 3 | - | 105 | ||||||||||||||||||
Non-life |
- | (3) | - | 9 | - | 6 | ||||||||||||||||||
Distribution |
- | 2 | - | - | - | 2 | ||||||||||||||||||
Asset Management |
- | - | - | 24 | - | 24 | ||||||||||||||||||
Other |
- | - | - | - | (25) | (25) | ||||||||||||||||||
Share in underlying earnings before tax of associates |
2 | - | - | 4 | - | 6 | ||||||||||||||||||
Underlying earnings before tax |
371 | 85 | 26 | 74 | (25) | 531 | ||||||||||||||||||
Fair value items |
(502) | 14 | (8) | (12) | 15 | (493) | ||||||||||||||||||
Realized gains / (losses) on investments |
7 | 190 | 9 | (4) | - | 202 | ||||||||||||||||||
Impairment charges |
(16) | (13) | (12) | (4) | - | (45) | ||||||||||||||||||
Other income / (charges) |
90 | (2) | (1) | (124) | (5) | (42) | ||||||||||||||||||
Run-off businesses |
1 | - | - | - | - | 1 | ||||||||||||||||||
Income before tax |
(49) | 274 | 14 | (70) | (15) | 154 | ||||||||||||||||||
Income tax |
56 | (84) | 89 | 6 | 6 | 73 | ||||||||||||||||||
Net income |
7 | 190 | 103 | (64) | (9) | 227 | ||||||||||||||||||
Net underlying earnings |
280 | 66 | 119 | 48 | (18) | 495 | ||||||||||||||||||
Employee numbers
|
||||||||||||||||||||||||
Sept. 30, 2013 |
Dec. 31, 2012 |
|||||||||||||||||||||||
Employees excluding agents, joint ventures and associates |
20,639 | 20,902 | ||||||||||||||||||||||
Agents |
2,856 | 2,748 | ||||||||||||||||||||||
Total number of employees excluding joint ventures & associates |
23,495 | 23,650 | ||||||||||||||||||||||
Aegons share of employees (including agents) in joint ventures |
724 | 757 | ||||||||||||||||||||||
Aegons share of employees (including agents) in associates |
2,475 | 2,443 | ||||||||||||||||||||||
Total |
26,694 | 26,850 |
Currencies
Income statement items: average rate 1 EUR = USD 1.3161 (2012: USD 1.2811).
Income statement items: average rate 1 EUR = GBP 0.8512 (2012: GBP 0.8115).
Balance sheet items: closing rate 1 EUR = USD 1.3537 (2012: USD 1.2865; year-end 2012.Q4: USD 1.3184).
Balance sheet items: closing rate 1 EUR = GBP 0.8359 (2012: GBP 0.7967; year-end 2012.Q4: GBP 0.8111).
Page 8 of 23
AMERICAS
¡ | Underlying earnings before tax increase 8% to USD 490 million |
¡ | Net income declines to USD 11 million primarily due to economic assumption changes |
¡ | Sales of life insurance decline 3% to USD 154 million, as higher sales of term life were more than offset by lower universal life sales due to focus on profitability |
¡ | Gross deposits up 32% to USD 10.5 billion reflect strong growth in pensions and variable annuities |
Underlying earnings before tax
Underlying earnings from the Americas in the third quarter of 2013 were up 8% to USD 490 million, driven by growth in both the Variable Annuities and Pension businesses from both markets and net inflows, as well as positive mortality experience in Life & Protection. Favorable mortality experience, actuarial assumption changes and model refinements had a combined net positive impact of USD 26 million on underlying earnings.
- | Life & Protection earnings increased by 3% to USD 219 million and included the net impact of actuarial assumption changes and model refinements of USD 13 million and favorable mortality of USD 20 million. |
- | Earnings from Individual Savings & Retirement rose 34% to USD 182 million. Variable annuities earnings more than doubled to USD 136 million, primarily as a result of a benefit from actuarial assumption changes and model refinements of USD 27 million, as opposed to charges from actuarial assumption changes in the third quarter of 2012 and higher fee income from higher account balances. Fixed annuity earnings declined to USD 37 million, driven by a charge of USD 21 million resulting from actuarial assumption changes, continued spread compression and the reduction of the portfolio as the business is being de-emphasized. Earnings from retail mutual funds increased to USD 9 million, as a result of higher account balances. |
- | Employer Solutions & Pensions earnings declined 6% to USD 90 million. Excluding one-time items recorded in the third quarter of 2012, earnings increased, resulting from the positive effect of higher average account balances. |
- | The loss from Canada amounted to USD 3 million, as the third quarter included a charge of USD 14 million for actuarial assumption changes and model refinements. Latin America contributed USD 2 million in underlying earnings for the quarter. |
Net income
Net income from Aegons businesses in the Americas amounted to USD 11 million in the third quarter. Higher underlying earnings and other income were more than offset by a sharp decline in the results from fair value items and lower realized gains.
Results from fair value items amounted to USD (662) million for the quarter. The loss was mainly driven by long-term economic assumption changes totaling USD (514) million. Aegon has reduced the annual equity market total return assumption from 9% to 8%, which accounted for approximately USD 178 million. Aegon has also lowered the long-term assumption for 10-year US Treasury yields by 50 basis points to 4.25%, In addition, the grading period towards the long-term assumption has been increased from 5 to 10 years for the 10-year US Treasury yield assumption, while the period during which an annual return of 4% is expected for bond separate accounts has been increased from 5 to 10 years, with an expected return of 6% thereafter. These adjustments accounted for approximately USD 336 million.
The loss on fair value hedges without an accounting match under IFRS was USD 172 million. This was mainly driven by the macro hedge in the Americas, on which the loss was USD 134 million in the third quarter of 2013. Results in the quarter were unfavorably impacted primarily by a strong increase of the equity markets. The loss on Aegons equity collar hedge program was USD 47 million. Aegon entered
Page 9 of 23
into an equity collar hedge in the fourth quarter of 2012 to protect US statutory capital from a significant drop in equity markets, as the present value of future fee income from variable annuities is a component of statutory capital. Aegon remains committed to protecting its balance sheet from equity market risks.
Fair value hedging with an accounting match, which include the hedges on Aegons GMWB variable annuities block, contributed USD 17 million to earnings. Fair value investments outperformed by USD 32 million.
Gains on investments of USD 11 million were realized as a result of normal trading activity. Impairments remained low in the current benign credit environment, slightly decreasing to USD 21 million for the quarter. Impairments were primarily related to investments in subprime residential mortgage-backed securities. Other income amounted to USD 119 million, mainly related to a gain on the recapture of certain reinsurance contracts.
The results of run-off businesses declined to USD 1 million, mainly driven by lower spreads and unfavorable mortality in payout annuities.
Return on capital
In the third quarter of 2013, the return on average capital, excluding revaluation reserves and defined benefit plan remeasurements, invested in Aegons business in the Americas amounted to 7.8%. Excluding the capital allocated to the run-off businesses, return on capital amounted to 8.9%. The return on capital of Aegons businesses excludes the benefit of leverage at the holding.
Operating expenses
Operating expenses increased 24% to USD 506 million, mainly due to USD 26 million of restructuring expenses that were recorded in the third quarter of 2013, while the third quarter of 2012 contained a one-time release related to post-retirement benefit plans. Excluding these items, operating expenses increased by 5%, primarily driven by higher sales expenses arising from the strong production in variable annuities.
Sales
New life sales declined 3% to USD 154 million, as lower universal life sales due to product withdrawals and product redesign were only partly offset by higher sales of term life products. New premium production for accident and health insurance declined 8% to USD 201 million, driven by the loss of two distribution partners for travel insurance and the termination of certain unprofitable affinity marketing partnerships.
Gross deposits increased 32% to USD 10.5 billion. Gross deposits in pensions were up 43%, driven by plan takeovers as well as benefiting from the focus on retirement readiness by growing customer participation and contributions through auto enrollment and auto escalation. Gross deposits in variable annuities were up by 67% compared to the third quarter of 2012, mainly driven by Aegons continued focus on key distribution partners. New variable annuity distribution arrangements continue to be added, including a distribution agreement with JPMorgan Chase, which together with the recently announced agreement with Edward Jones, started production in October 2013. The distribution agreement with Voya already contributed to sales in the third quarter of 2013. Gross deposits in stable value solutions of USD 1.4 billion were down as stable value balances are targeted to be maintained around current levels.
Net deposits, excluding run-off businesses, tripled to USD 3.4 billion in the third quarter, driven by strong growth in pensions and variable annuities. Net deposits in pensions nearly quadrupled to USD 2.8 billion, while net deposits in variable annuities nearly tripled to USD 1.4 billion. Net flows into retail mutual funds declined to nearly zero, as sales growth was partly offset by higher outflows
Page 10 of 23
from bond funds due to rising interest rates. Net deposits in stable value solutions remained negative as the business targets 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 third quarter.
Market consistent value of new business
The market consistent value of new business strongly increased to USD 234 million in the third quarter of 2013, driven by strong improvements in variable annuities and life products. The former benefited from higher sales volumes as well as increased margins, as interest rates were significantly higher throughout the third quarter of 2013 than in the similar period in 2012. The improvement in life insurance is primarily the result of product withdrawals and product redesign, including universal life products with secondary guarantees.
Revenue-generating investments
Revenue-generating investments amounted to USD 353 billion at the end of the third quarter, up 3% compared with the end of the second quarter of 2013. Investments for account of policyholders and off balance sheet investments for third parties were up by 5%, driven by net deposits as well as positive market movements. This increase was only partly offset by a decrease in general account assets as a result of outflows from the run-off businesses and fixed annuities.
Page 11 of 23
Americas c)
|
||||||||||||||||||||||||||||||||||||
USD millions |
Notes | Q3 2013 | Q2 2013 | % | Q3 2012 | % | YTD 2013 | YTD 2012 | % | |||||||||||||||||||||||||||
Underlying earnings before tax by line of business |
||||||||||||||||||||||||||||||||||||
Life and protection |
219 | 195 | 12 | 212 | 3 | 574 | 558 | 3 | ||||||||||||||||||||||||||||
Fixed annuities |
37 | 61 | (39 | ) | 66 | (44 | ) | 154 | 192 | (20 | ) | |||||||||||||||||||||||||
Variable annuities |
136 | 104 | 31 | 63 | 116 | 342 | 247 | 38 | ||||||||||||||||||||||||||||
Retail mutual funds |
9 | 7 | 29 | 7 | 29 | 21 | 17 | 24 | ||||||||||||||||||||||||||||
Individual savings and retirement products |
182 | 172 | 6 | 136 | 34 | 517 | 456 | 13 | ||||||||||||||||||||||||||||
Employer solutions & pensions |
90 | 89 | 1 | 96 | (6 | ) | 261 | 246 | 6 | |||||||||||||||||||||||||||
Canada |
(3 | ) | 12 | - | 6 | - | 15 | 31 | (52 | ) | ||||||||||||||||||||||||||
Latin America |
2 | 1 | 100 | 3 | (33 | ) | 5 | 8 | (38 | ) | ||||||||||||||||||||||||||
Underlying earnings before tax |
490 | 469 | 4 | 453 | 8 | 1,372 | 1,299 | 6 | ||||||||||||||||||||||||||||
Fair value items |
(662 | ) | (190 | ) | - | (56 | ) | - | (1,159 | ) | (76 | ) | - | |||||||||||||||||||||||
Realized gains / (losses) on investments |
11 | 38 | (71 | ) | 86 | (87 | ) | 111 | 168 | (34 | ) | |||||||||||||||||||||||||
Impairment charges |
(21 | ) | (41 | ) | 49 | (22 | ) | 5 | (61 | ) | (111 | ) | 45 | |||||||||||||||||||||||
Other income / (charges) |
119 | (2 | ) | - | - | - | 111 | (3 | ) | - | ||||||||||||||||||||||||||
Run- off businesses |
1 | 17 | (94 | ) | 15 | (93 | ) | - | 21 | - | ||||||||||||||||||||||||||
Income before tax |
(62 | ) | 291 | - | 476 | - | 374 | 1,298 | (71 | ) | ||||||||||||||||||||||||||
Income tax |
73 | (69 | ) | - | (96 | ) | - | 4 | (259 | ) | - | |||||||||||||||||||||||||
Net income |
11 | 222 | (95 | ) | 380 | (97 | ) | 378 | 1,039 | (64 | ) | |||||||||||||||||||||||||
Net underlying earnings |
371 | 336 | 10 | 334 | 11 | 1,002 | 945 | 6 | ||||||||||||||||||||||||||||
Commissions and expenses |
1,081 | 1,096 | (1 | ) | 931 | 16 | 3,239 | 3,186 | 2 | |||||||||||||||||||||||||||
of which operating expenses |
506 | 488 | 4 | 407 | 24 | 1,485 | 1,334 | 11 | ||||||||||||||||||||||||||||
New life sales |
12 | |||||||||||||||||||||||||||||||||||
Life single premiums |
30 | 20 | 50 | 56 | (46 | ) | 94 | 183 | (49 | ) | ||||||||||||||||||||||||||
Life recurring premiums annualized |
151 | 160 | (6 | ) | 153 | (1 | ) | 452 | 459 | (2 | ) | |||||||||||||||||||||||||
Total recurring plus 1/10 single |
154 | 162 | (5 | ) | 158 | (3 | ) | 461 | 477 | (3 | ) | |||||||||||||||||||||||||
Life & protection |
124 | 133 | (7 | ) | 133 | (7 | ) | 376 | 400 | (6 | ) | |||||||||||||||||||||||||
Canada |
19 | 17 | 12 | 15 | 27 | 52 | 44 | 18 | ||||||||||||||||||||||||||||
Latin America |
11 | 12 | (8 | ) | 10 | 10 | 33 | 33 | - | |||||||||||||||||||||||||||
Total recurring plus 1/10 single |
154 | 162 | (5 | ) | 158 | (3 | ) | 461 | 477 | (3 | ) | |||||||||||||||||||||||||
New premium production accident and health insurance |
201 | 207 | (3 | ) | 219 | (8 | ) | 672 | 675 | - | ||||||||||||||||||||||||||
Gross deposits (on and off balance) by line of business |
12 | |||||||||||||||||||||||||||||||||||
Life & protection |
5 | 1 | - | 2 | 150 | 8 | 8 | - | ||||||||||||||||||||||||||||
Fixed annuities |
123 | 136 | (10 | ) | 58 | 112 | 448 | 226 | 98 | |||||||||||||||||||||||||||
Variable annuities |
2,324 | 2,251 | 3 | 1,391 | 67 | 6,197 | 3,909 | 59 | ||||||||||||||||||||||||||||
Retail mutual funds |
950 | 1,224 | (22 | ) | 873 | 9 | 3,361 | 2,439 | 38 | |||||||||||||||||||||||||||
Individual savings & retirement products |
3,397 | 3,611 | (6 | ) | 2,322 | 46 | 10,006 | 6,574 | 52 | |||||||||||||||||||||||||||
Employer solutions & pensions |
7,094 | 4,725 | 50 | 5,613 | 26 | 17,987 | 19,435 | (7 | ) | |||||||||||||||||||||||||||
Canada |
23 | 30 | (23 | ) | 33 | (30 | ) | 100 | 140 | (29 | ) | |||||||||||||||||||||||||
Latin America |
3 | 5 | (40 | ) | 4 | (25 | ) | 14 | 11 | 27 | ||||||||||||||||||||||||||
Total gross deposits |
10,522 | 8,372 | 26 | 7,974 | 32 | 28,115 | 26,168 | 7 | ||||||||||||||||||||||||||||
Net deposits (on and off balance) by line of business |
12 | |||||||||||||||||||||||||||||||||||
Life & protection |
(8 | ) | (12 | ) | 33 | (8 | ) | - | (30 | ) | (28 | ) | (7 | ) | ||||||||||||||||||||||
Fixed annuities |
(557 | ) | (608 | ) | 8 | (544 | ) | (2 | ) | (1,718 | ) | (1,779 | ) | 3 | ||||||||||||||||||||||
Variable annuities |
1,362 | 1,304 | 4 | 476 | 186 | 3,365 | 1,288 | 161 | ||||||||||||||||||||||||||||
Retail mutual funds |
25 | 150 | (83 | ) | 153 | (84 | ) | 418 | 210 | 99 | ||||||||||||||||||||||||||
Individual savings & retirement products |
830 | 846 | (2 | ) | 85 | - | 2,065 | (281 | ) | - | ||||||||||||||||||||||||||
Employer solutions & pensions |
2,655 | 803 | - | 1,142 | 132 | 5,299 | 4,051 | 31 | ||||||||||||||||||||||||||||
Canada |
(80 | ) | (96 | ) | 17 | (90 | ) | 11 | (270 | ) | (287 | ) | 6 | |||||||||||||||||||||||
Latin America |
3 | 3 | - | 2 | 50 | 9 | 8 | 13 | ||||||||||||||||||||||||||||
Total net deposits excluding run-off businesses |
3,400 | 1,544 | 120 | 1,131 | - | 7,073 | 3,463 | 104 | ||||||||||||||||||||||||||||
Run-off businesses |
(644 | ) | (838 | ) | 23 | (360 | ) | (79 | ) | (2,898 | ) | (2,485 | ) | (17 | ) | |||||||||||||||||||||
Total net deposits |
2,756 | 706 | - | 771 | - | 4,175 | 978 | - | ||||||||||||||||||||||||||||
Revenue-generating investments
|
||||||||||||||||||||||||||||||||||||
Sept. 30, 2013 |
Jun. 30, 2013 |
% | Dec. 31, 2012 |
% | ||||||||||||||||||||||||||||||||
Revenue-generating investments (total) |
352,553 | 340,890 | 3 | 333,759 | 6 | |||||||||||||||||||||||||||||||
Investments general account |
106,324 | 107,039 | (1 | ) | 113,988 | (7 | ) | |||||||||||||||||||||||||||||
Investments for account of policyholders |
98,199 | 92,832 | 6 | 86,975 | 13 | |||||||||||||||||||||||||||||||
Off balance sheet investments third parties |
148,030 | 141,019 | 5 | 132,796 | 11 |
Page 12 of 23
THE NETHERLANDS
¡ | Underlying earnings before tax flat at EUR 85 million, as improvements in Pensions and Non-life are offset by lower earnings in Life & Savings |
¡ | Increase in net income to EUR 190 million, mainly due to higher realized gains |
¡ | New life sales decline to EUR 23 million due to lower pension sales |
Underlying earnings before tax
Underlying earnings from Aegons operations in the Netherlands remained stable at EUR 85 million as higher earnings in Pensions and Non-life were offset by lower earnings in Life & Savings.
| Earnings from Aegons Life & Savings operations in the Netherlands declined to EUR 59 million. This was mainly caused by the impact of EUR 7 million of reduced policy charges on unit-linked products, as part of the acceleration of product improvements to certain unit-linked insurance policies, in addition to the non-recurrence of a provision release of EUR 8 million recorded in the third quarter of 2012. |
| Earnings from the Pension business nearly doubled to EUR 27 million, mainly driven by higher income on mortgage investments allocated to the investment portfolio of the Pension business as production increased, and a gain of EUR 3 million. |
| Non-life earnings improved to a loss of EUR 3 million, as lower claims in the general insurance business were only partly offset by higher claims on disability products. Management actions have been taken to further improve the profitability of the Non-life business, which already resulted in an improvement of earnings from especially general insurance. |
| The Distribution businesses recorded a profit of EUR 2 million, up from the third quarter of 2012 due to lower expenses. |
Net income
Net income from Aegons businesses in the Netherlands increased to EUR 190 million. Realized gains on investments totaled EUR 190 million and were mainly driven by asset liability management resulting from the new regulatory yield curve, in addition to normal trading activity. Results on fair value items amounted to EUR 14 million, as the results on the guarantee portfolio of EUR 43 million more than offset real estate revaluations of EUR (12) million and other fair value items of EUR (17) million. Impairments of EUR 13 million were mainly driven by EUR 8 million of impairments on the residential mortgage portfolio. Incurred losses on the mortgage portfolio did not show a significant increase in the third quarter.
Return on capital
The return on average capital, excluding revaluation reserves and defined benefit plan remeasurements, invested in Aegons businesses in the Netherlands was stable at 6.7%. Return on capital of Aegons businesses excludes the benefit of leverage at the holding.
Operating expenses
Operating expenses remained stable at EUR 182 million, as realized cost savings were offset by investments in the business.
Sales
New life sales declined 8% to EUR 23 million in the third quarter of 2013. Individual life sales increased 14% to EUR 8 million, caused by higher term life sales related to new mortgage production. Pension sales were down 17% to EUR 15 million.
Page 13 of 23
Production of mortgages in the third quarter of 2013 amounted to EUR 916 million, 39% above the level achieved in the third quarter of 2012, mainly driven by the improving sentiment on the Dutch housing market. Premium production for accident and health amounted to EUR 5 million, while general insurance production amounted to EUR 6 million.
Gross deposits slightly increased to EUR 278 million, as a higher production of banksparen products was mostly offset by a decline in traditional savings deposits.
Market consistent value of new business
The market consistent value of new business in the Netherlands amounted to EUR 70 million, up 19% compared to the third quarter of 2012. This increase was driven by higher contributions from mortgages as production increased.
Revenue-generating investments
Revenue-generating investments amounted to EUR 71 billion, up 3% compared with the previous quarter.
The Netherlands c)
|
||||||||||||||||||||||||||||||||||
EUR millions | Notes | Q3 2013 | Q2 2013 | % | Q3 2012 | % | YTD 2013 | YTD 2012 | % | |||||||||||||||||||||||||
Underlying earnings before tax by line of business |
||||||||||||||||||||||||||||||||||
Life and Savings |
59 | 59 | - | 79 | (25 | ) | 185 | 188 | (2 | ) | ||||||||||||||||||||||||
Pensions |
27 | 19 | 42 | 14 | 93 | 59 | 62 | (5 | ) | |||||||||||||||||||||||||
Non-life |
(3 | ) | (10 | ) | 70 | (8 | ) | 63 | (14 | ) | (23 | ) | 39 | |||||||||||||||||||||
Distribution |
2 | 4 | (50 | ) | - | - | 12 | 11 | 9 | |||||||||||||||||||||||||
Share in underlying earnings before tax of associates |
- | 2 | - | - | - | 2 | 2 | - | ||||||||||||||||||||||||||
Underlying earnings before tax |
85 | 74 | 15 | 85 | - | 244 | 240 | 2 | ||||||||||||||||||||||||||
Fair value items |
14 | (36 | ) | - | (53 | ) | - | (95 | ) | 115 | - | |||||||||||||||||||||||
Realized gains / (losses) on investments |
190 | 23 | - | 40 | - | 276 | 68 | - | ||||||||||||||||||||||||||
Impairment charges |
(13 | ) | (14 | ) | 7 | (13 | ) | - | (35 | ) | (19 | ) | (84 | ) | ||||||||||||||||||||
Other income / (charges) |
(2 | ) | (27) | 93 | (3) | 33 | (29) | (272) | 89 | |||||||||||||||||||||||||
Income before tax |
274 | 20 | - | 56 | - | 361 | 132 | 173 | ||||||||||||||||||||||||||
Income tax |
(84 | ) | (1 | ) | - | (4 | ) | - | (93 | ) | 17 | - | ||||||||||||||||||||||
Net income |
190 | 19 | - | 52 | - | 268 | 149 | 80 | ||||||||||||||||||||||||||
Net underlying earnings |
66 | 57 | 16 | 68 | (3 | ) | 188 | 191 | (2 | ) | ||||||||||||||||||||||||
Commissions and expenses |
240 | 254 | (6 | ) | 249 | (4 | ) | 746 | 781 | (4 | ) | |||||||||||||||||||||||
of which operating expenses |
182 | 181 | 1 | 182 | - | 542 | 552 | (2 | ) | |||||||||||||||||||||||||
New life sales |
||||||||||||||||||||||||||||||||||
Life single premiums |
192 | 389 | (51 | ) | 189 | 2 | 927 | 580 | 60 | |||||||||||||||||||||||||
Life recurring premiums annualized |
3 | 10 | (70 | ) | 6 | (50 | ) | 18 | 22 | (18 | ) | |||||||||||||||||||||||
Total recurring plus 1/10 single |
23 | 48 | (52 | ) | 25 | (8 | ) | 111 | 80 | 39 | ||||||||||||||||||||||||
Life and Savings |
8 | 10 | (20 | ) | 7 | 14 | 32 | 37 | (14 | ) | ||||||||||||||||||||||||
Pensions |
15 | 38 | (61 | ) | 18 | (17 | ) | 79 | 43 | 84 | ||||||||||||||||||||||||
Total recurring plus 1/10 single |
23 | 48 | (52 | ) | 25 | (8 | ) | 111 | 80 | 39 | ||||||||||||||||||||||||
New premium production accident and health insurance |
5 | 4 | 25 | 2 | 150 | 22 | 15 | 47 | ||||||||||||||||||||||||||
New premium production general insurance |
6 | 6 | - | 7 | (14 | ) | 20 | 23 | (13 | ) | ||||||||||||||||||||||||
Gross deposits (on and off balance) by line of business |
||||||||||||||||||||||||||||||||||
Life and Savings |
278 | 327 | (15 | ) | 275 | 1 | 1,009 | 1,202 | (16 | ) | ||||||||||||||||||||||||
Total gross deposits |
278 | 327 | (15 | ) | 275 | 1 | 1,009 | 1,202 | (16 | ) | ||||||||||||||||||||||||
Net deposits (on and off balance) by line of business |
||||||||||||||||||||||||||||||||||
Life and Savings |
(64) | 85 | - | (480) | 87 | (113) | (731) | 85 | ||||||||||||||||||||||||||
Total net deposits |
(64 | ) | 85 | - | (480 | ) | 87 | (113 | ) | (731 | ) | 85 |
Revenue-generating investments
|
||||||||||||||||||||
Sept. 30, | Jun. 30, | Dec. 31, | ||||||||||||||||||
2013 | 2013 | % | 2012 | % | ||||||||||||||||
Revenue-generating investments (total) |
71,001 | 68,873 | 3 | 69,205 | 3 | |||||||||||||||
Investments general account |
44,431 | 44,013 | 1 | 43,059 | 3 | |||||||||||||||
Investments for account of policyholders |
25,560 | 23,839 | 7 | 25,094 | 2 | |||||||||||||||
Off balance sheet investments third parties |
1,010 | 1,021 | (1 | ) | 1,052 | (4 | ) |
Page 14 of 23
UNITED KINGDOM
¡ | Underlying earnings before tax up to GBP 23 million due to higher equity markets |
¡ | Net income up to GBP 88 million due to one-time tax benefits |
¡ | New life sales up 17% to GBP 190 million, driven by auto enrolment and strong platform and group pensions sales |
¡ | Platform assets exceeded GBP 1 billion in October, one year after launch |
Underlying earnings before tax
Underlying earnings before tax from Aegons operations in the United Kingdom increased to GBP 23 million in the third quarter, driven by higher equity markets.
- | Earnings from Life declined 11% to GBP 17 million, driven by unfavorable mortality experience. |
- | Earnings from Pensions increased to GBP 6 million. Earnings benefited from the favorable impact of higher equity markets compared to the third quarter of 2012, as well as a one-time gain of GBP 2 million. This was partly offset by expenses related to creating a digital capability for the non-advised client group in order to facilitate the upgrade to the platform. In addition, earnings were impacted by GBP 4 million from adverse persistency. Persistency has started to improve, but is still expected to have an impact in the fourth quarter of 2013. |
Net income
Net income amounted to GBP 88 million, driven by a one-time tax benefit of GBP 79 million related to a reduction in the corporate tax rate during the third quarter of 2013, which was partly offset by business transformation costs of GBP 8 million. Business transformation costs in the third quarter of 2013 were mostly related to back office-restructuring to help reposition Aegon in the post-RDR environment. The business transformation is expected to continue into 2014. Impairments were GBP 11 million, driven by a single corporate exposure. Realized gains amounted to GBP 8 million.
Return on capital
The return on average capital, excluding revaluation reserves and defined benefit plan remeasurements, invested in Aegons businesses in the United Kingdom increased to 14.2% in the third quarter of 2013. This was primarily caused by a one-time benefit relating to the reduction of the corporate tax rate from 23% to 20% per April 1, 2015, in the United Kingdom.
Operating expenses
Operating expenses for the third quarter of 2013 increased 8% to GBP 78 million, as expenses were incurred related to investments in technology and business transformation costs of GBP 13 million. Excluding these costs, expenses were down as compared to the third quarter of 2012, due to cost reductions and the divestment of distribution firm Positive Solutions.
Sales
New life sales were up 17% to GBP 190 million compared to the third quarter of 2012, reflecting the benefit of auto enrolment and strong sales in group pensions. Platform assets continued to grow during the third quarter of 2013, exceeding GBP 1 billion in October.
Gross deposits continued to grow and amounted to GBP 86 million, driven by platform savings products, as the platform gains momentum in the market.
Market consistent value of new business
The market consistent value of new business in the United Kingdom declined to GBP 9 million, driven by lower margins on annuities and lower margins arising from auto enrolment on group pension schemes.
Page 15 of 23
Revenue-generating investments
Revenue-generating investments increased to GBP 57 billion, up 2% compared to the end of the second quarter of 2013, primarily as a result of higher equity markets.
United Kingdom c)
|
||||||||||||||||||||||||||||||||||||
GBP millions |
Notes | Q3 2013 | Q2 2013 | % | Q3 2012 | % | YTD 2013 | YTD 2012 | % | |||||||||||||||||||||||||||
Underlying earnings before tax by line of business |
||||||||||||||||||||||||||||||||||||
Life |
17 | 23 | (26 | ) | 19 | (11 | ) | 57 | 49 | 16 | ||||||||||||||||||||||||||
Pensions |
6 | - | - | 2 | 200 | 11 | 20 | (45 | ) | |||||||||||||||||||||||||||
Distribution |
- | - | - | (1 | ) | - | (2 | ) | (2 | ) | - | |||||||||||||||||||||||||
Underlying earnings before tax |
23 | 23 | - | 20 | 15 | 66 | 67 | (1 | ) | |||||||||||||||||||||||||||
Fair value items |
(6 | ) | (1 | ) | - | (14 | ) | 57 | (9 | ) | (17 | ) | 47 | |||||||||||||||||||||||
Realized gains / (losses) on investments |
8 | 23 | (65 | ) | 12 | (33 | ) | 32 | 40 | (20 | ) | |||||||||||||||||||||||||
Impairment charges |
(11 | ) | (13 | ) | 15 | - | - | (24 | ) | - | - | |||||||||||||||||||||||||
Other income / (charges) |
7 | (1 | ) | (43 | ) | 98 | 12 | - | (40 | ) | 27 | - | ||||||||||||||||||||||||
Income before tax |
13 | (11 | ) | - | 30 | (57 | ) | 25 | 117 | (79 | ) | |||||||||||||||||||||||||
Income tax attributable to policyholder return |
(8 | ) | 2 | - | (11 | ) | 27 | (12 | ) | (27 | ) | 56 | ||||||||||||||||||||||||
Income before income tax on shareholders return |
5 | (9 | ) | - | 19 | (74 | ) | 13 | 90 | (86 | ) | |||||||||||||||||||||||||
Income tax on shareholders return |
83 | 6 | - | 11 | - | 87 | 19 | - | ||||||||||||||||||||||||||||
Net income |
88 | (3 | ) | - | 30 | 193 | 100 | 109 | (8 | ) | ||||||||||||||||||||||||||
Net underlying earnings |
101 | 25 | - | 32 | - | 144 | 92 | 57 | ||||||||||||||||||||||||||||
Commissions and expenses |
143 | 180 | (21 | ) | 150 | (5 | ) | 474 | 436 | 9 | ||||||||||||||||||||||||||
of which operating expenses |
78 | 97 | (20 | ) | 72 | 8 | 244 | 201 | 21 | |||||||||||||||||||||||||||
New life sales |
8 | |||||||||||||||||||||||||||||||||||
Life single premiums |
796 | 913 | (13 | ) | 643 | 24 | 2,529 | 1,835 | 38 | |||||||||||||||||||||||||||
Life recurring premiums annualized |
110 | 156 | (29 | ) | 98 | 12 | 428 | 327 | 31 | |||||||||||||||||||||||||||
Total recurring plus 1/10 single |
190 | 247 | (23 | ) | 163 | 17 | 681 | 511 | 33 | |||||||||||||||||||||||||||
Life |
15 | 15 | - | 19 | (21 | ) | 45 | 53 | (15 | ) | ||||||||||||||||||||||||||
Pensions |
175 | 232 | (25 | ) | 144 | 22 | 636 | 458 | 39 | |||||||||||||||||||||||||||
Total recurring plus 1/10 single |
190 | 247 | (23 | ) | 163 | 17 | 681 | 511 | 33 | |||||||||||||||||||||||||||
Gross deposits (on and off balance) by line of business |
||||||||||||||||||||||||||||||||||||
Variable annuities |
- | - | - | 4 | - | 2 | 18 | (89 | ) | |||||||||||||||||||||||||||
Savings |
86 | 59 | 46 | - | - | 185 | - | - | ||||||||||||||||||||||||||||
Total gross deposits |
86 | 59 | 46 | 4 | - | 187 | 18 | - | ||||||||||||||||||||||||||||
Net deposits (on and off balance) by line of business |
||||||||||||||||||||||||||||||||||||
Variable annuities |
(10 | ) | (13 | ) | 23 | (4 | ) | (150 | ) | (28 | ) | (6 | ) | - | ||||||||||||||||||||||
Savings |
78 | 58 | 34 | - | - | 175 | - | - | ||||||||||||||||||||||||||||
Total net deposits |
68 | 45 | 51 | (4 | ) | - | 147 | (6 | ) | - |
Revenue-generating investments
|
||||||||||||||||||||
Sept. 30, | Jun. 30, | Dec. 31, | ||||||||||||||||||
2013 | 2013 | % | 2012 | % | ||||||||||||||||
Revenue-generating investments (total) |
56,890 | 56,000 | 2 | 54,533 | 4 | |||||||||||||||
Investments general account |
9,042 | 8,939 | 1 | 9,196 | (2 | ) | ||||||||||||||
Investments for account of policyholders |
47,658 | 46,950 | 2 | 45,329 | 5 | |||||||||||||||
Off balance sheet investments third parties |
190 | 111 | 71 | 8 | - |
Page 16 of 23
NEW MARKETS
¡ | Underlying earnings before tax increase 6% to EUR 74 million mainly driven by assumption changes and model refinements in Asia |
¡ | Net loss of EUR 64 million; intangibles of EUR 182 million related to Polish pension funds written off as a result of changing legislation |
¡ | New life sales increased to EUR 51 million due to growth in Spain and Asia |
Underlying earnings before tax
In New Markets, Aegons underlying earnings before tax increased 6% to EUR 74 million, as actuarial assumption changes and model refinements in Asia more than offset the divestments in Spain.
- | Earnings from Central & Eastern Europe increased 6% to EUR 17 million, as a higher non-life result in Hungary and increased life earnings in Poland were partly offset by the introduction of the insurance tax in Hungary for EUR 2 million and the negative impact of the first time inclusion of Ukraine, which recorded a loss of EUR 1 million in the third quarter. |
- | Results from Aegons operations in Asia increased to EUR 27 million, driven by actuarial assumption changes and model refinements of EUR 22 million. Excluding these effects, earnings increased, as the positive impact of the growth of the business more than offset higher acquisition costs resulting from the strong growth in variable annuities production in Japan. |
- | Earnings from Spain & France decreased to EUR 5 million due to the divestment of the joint ventures with Banca Cívica and Unnim. The comparable quarter of 2012 included underlying earnings of EUR 5 million from the joint venture with Banca Cívica, while the joint venture with Unnim contributed EUR 4 million. The results of the new joint venture with Santander were included, but were offset by higher investments in developing a direct distribution channel. |
The earnings contribution from partner La Mondiale in France was stable compared to the same quarter last year and amounted to EUR 5 million.
- | Results from Variable Annuities Europe amounted to EUR 1 million, driven by the growth of the business and cost savings. |
- | Earnings from Aegon Asset Management declined 4% to EUR 24 million, as the positive impact of higher third-party asset balances was more than offset by the loss of earnings from the sale of hedge fund manager Prisma and lower performance fees as compared to the high level achieved in the third quarter of 2012. |
Net income
The net loss from Aegons operations in New Markets amounted to EUR 64 million. Higher underlying earnings and the gain on the divestment of the joint venture with CAM of EUR 74 million were more than offset by an impairment on intangible assets related to the Polish pension fund business of EUR 182 million and a charge of EUR 6 million related to the divestment of the Czech pension fund unit.
In June 2013, the Polish government started a process aimed at overhauling the existing state pension system. Based on the likely outcome of this process and subsequent legislation that is due to be implemented, Aegon has decided to impair the intangible assets related to the Polish pension business by EUR 182 million. Following this impairment, EUR 10 million of intangible assets, including DAC, related to the Polish pension business remain on Aegons balance sheet.
Page 17 of 23
Impairments amounted to EUR 4 million, due the negative impact of the weakening of the Hungarian Forint on the Hungarian foreign currency mortgage portfolio. In addition, impairments were negatively impacted by client anticipation on additional debt relief measures promised by the Hungarian government, which are expected to be announced in the fourth quarter of 2013. These were partly offset by a positive result on the currency hedge set up to protect this portfolio in fair value items.
Return on capital
The return on average capital, excluding revaluation reserves, invested in Aegons businesses in New Markets increased to 8.0%, mainly the result of higher net underlying earnings. Return on capital of Aegons businesses excludes the benefit of leverage at the holding.
Operating expenses
Operating expenses declined 1% to EUR 162 million in the third quarter. Cost savings and lower variable expenses in Aegon Asset Management more than offset higher costs in Asia, driven by investments to support future growth, the inclusion of the business in Ukraine and the introduction of the insurance tax in Hungary.
Sales
New life sales increased 6% to EUR 51 million.
- | In Central & Eastern Europe, new life sales declined 4% to EUR 25 million. Sales growth in Turkey due to improved distribution and in Slovakia due to new product launches was more than offset by lower sales in Poland resulting from reduced production in the broker channel. |
- | In Asia, new life sales increased 17% to EUR 14 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. |
- | New life sales in Spain increased 20% to EUR 12 million driven by sales from the joint venture with Santander, which accounted for EUR 5 million of the new life sales in the third quarter of 2013. |
New premium production from Aegons accident and health insurance business declined to EUR 10 million, mainly driven by lower sales in Spain and negative currency effects. New premium production from Aegons general insurance business doubled to EUR 10 million, driven by the inclusion of the Santander joint venture and growth in Central & Eastern Europe.
Gross deposits in New Markets amounted to EUR 2.7 billion, down 2% from the third quarter of 2012. Gross deposits in Aegon Asset Management declined 6% to EUR 2.3 billion. Strong growth in institutional sales in the United States was offset by lower deposits in other geographies. Gross deposits in Asia more than tripled to EUR 169 million driven by strong sales of variable annuities in Japan.
Market consistent value of new business
The market consistent value of new business in New Markets increased 50% to EUR 27 million. Asia showed a strong improvement compared to the third quarter of 2012, driven by higher margins and increased sales, more than offsetting the negative impact of the divestments in Spain.
Revenue-generating investments
Revenue-generating investments remained flat at EUR 69 billion during the third quarter of 2013.
Page 18 of 23
New Markets c)
|
||||||||||||||||||||||||||||||||||||
EUR millions | Notes | Q3 2013 | Q2 2013 | % | Q3 2012 | % | YTD 2013 | YTD 2012 | % | |||||||||||||||||||||||||||
Underlying earnings before tax |
||||||||||||||||||||||||||||||||||||
Central Eastern Europe |
17 | 10 | 70 | 16 | 6 | 43 | 60 | (28 | ) | |||||||||||||||||||||||||||
Asia |
27 | 4 | - | 13 | 108 | 42 | 27 | 56 | ||||||||||||||||||||||||||||
Spain & France |
5 | 10 | (50 | ) | 16 | (69 | ) | 26 | 58 | (55 | ) | |||||||||||||||||||||||||
Variable Annuities Europe |
1 | 2 | (50 | ) | - | - | 4 | - | - | |||||||||||||||||||||||||||
Aegon Asset Management |
24 | 26 | (8 | ) | 25 | (4 | ) | 73 | 77 | (5 | ) | |||||||||||||||||||||||||
Underlying earnings before tax |
74 | 52 | 42 | 70 | 6 | 188 | 222 | (15 | ) | |||||||||||||||||||||||||||
Fair value items |
(12 | ) | (8 | ) | (50 | ) | (1 | ) | - | (23 | ) | (6 | ) | - | ||||||||||||||||||||||
Realized gains / (losses) on investments |
(4 | ) | 1 | - | 5 | - | (1 | ) | 10 | - | ||||||||||||||||||||||||||
Impairment charges |
(4 | ) | 4 | - | (5 | ) | 20 | (10 | ) | (9 | ) | (11 | ) | |||||||||||||||||||||||
Other income / (charges) |
(124 | ) | 106 | - | (8 | ) | - | (22 | ) | (26 | ) | 15 | ||||||||||||||||||||||||
Income before tax |
(70 | ) | 155 | - | 61 | - | 132 | 191 | (31 | ) | ||||||||||||||||||||||||||
Income tax |
6 | (12 | ) | - | (23 | ) | - | (23 | ) | (68 | ) | 66 | ||||||||||||||||||||||||
Net income |
(64 | ) | 143 | - | 38 | - | 109 | 123 | (11 | ) | ||||||||||||||||||||||||||
Net income / (loss) attributable to: |
||||||||||||||||||||||||||||||||||||
Equity holders of Aegon N.V. |
(64 | ) | 142 | - | 37 | - | 108 | 122 | (11 | ) | ||||||||||||||||||||||||||
Non-controlling interests |
- | 1 | - | 1 | - | 1 | 1 | - | ||||||||||||||||||||||||||||
Net underlying earnings |
48 | 38 | 26 | 46 | 4 | 125 | 149 | (16 | ) | |||||||||||||||||||||||||||
Commissions and expenses |
270 | 234 | 15 | 227 | 19 | 732 | 654 | 12 | ||||||||||||||||||||||||||||
of which operating expenses |
162 | 161 | 1 | 163 | (1 | ) | 480 | 460 | 4 | |||||||||||||||||||||||||||
New life sales |
12 | |||||||||||||||||||||||||||||||||||
Life single premiums |
133 | 175 | (24 | ) | 80 | 66 | 455 | 368 | 24 | |||||||||||||||||||||||||||
Life recurring premiums annualized |
37 | 39 | (5 | ) | 40 | (8 | ) | 124 | 159 | (22 | ) | |||||||||||||||||||||||||
Total recurring plus 1/10 single |
51 | 56 | (9 | ) | 48 | 6 | 170 | 196 | (13 | ) | ||||||||||||||||||||||||||
Life |
50 | 55 | (9 | ) | 47 | 6 | 167 | 188 | (11 | ) | ||||||||||||||||||||||||||
Associates |
1 | 1 | - | 1 | - | 3 | 8 | (63 | ) | |||||||||||||||||||||||||||
Total recurring plus 1/10 single |
51 | 56 | (9 | ) | 48 | 6 | 170 | 196 | (13 | ) | ||||||||||||||||||||||||||
Central Eastern Europe |
25 | 26 | (4 | ) | 26 | (4 | ) | 79 | 82 | (4 | ) | |||||||||||||||||||||||||
Asia |
14 | 19 | (26 | ) | 12 | 17 | 51 | 42 | 21 | |||||||||||||||||||||||||||
Spain & France |
12 | 11 | 9 | 10 | 20 | 40 | 72 | (44 | ) | |||||||||||||||||||||||||||
Total recurring plus 1/10 single |
51 | 56 | (9 | ) | 48 | 6 | 170 | 196 | (13 | ) | ||||||||||||||||||||||||||
New premium production accident and health insurance |
10 | 10 | - | 13 | (23 | ) | 32 | 30 | 7 | |||||||||||||||||||||||||||
New premium production general insurance |
10 | 8 | 25 | 5 | 100 | 24 | 16 | 50 | ||||||||||||||||||||||||||||
Gross deposits (on and off balance) |
12 | |||||||||||||||||||||||||||||||||||
Central Eastern Europe |
75 | 57 | 32 | 70 | 7 | 189 | 252 | (25 | ) | |||||||||||||||||||||||||||
Asia |
169 | 160 | 6 | 55 | - | 424 | 126 | - | ||||||||||||||||||||||||||||
Spain & France |
- | 1 | - | 10 | - | 8 | 31 | (74 | ) | |||||||||||||||||||||||||||
Variable Annuities Europe |
103 | 110 | (6 | ) | 116 | (11 | ) | 335 | 345 | (3 | ) | |||||||||||||||||||||||||
Aegon Asset Management |
2,343 | 5,527 | (58 | ) | 2,504 | (6 | ) | 10,152 | 7,821 | 30 | ||||||||||||||||||||||||||
Total gross deposits |
2,690 | 5,855 | (54 | ) | 2,755 | (2 | ) | 11,108 | 8,575 | 30 | ||||||||||||||||||||||||||
Net deposits (on and off balance) |
12 | |||||||||||||||||||||||||||||||||||
Central Eastern Europe |
59 | 39 | 51 | 16 | - | 63 | 40 | 58 | ||||||||||||||||||||||||||||
Asia |
162 | 152 | 7 | 54 | 200 | 384 | 121 | - | ||||||||||||||||||||||||||||
Spain & France |
- | (3 | ) | - | (7 | ) | - | (6 | ) | (44 | ) | 86 | ||||||||||||||||||||||||
Variable Annuities Europe |
1 | (2 | ) | - | 9 | (89 | ) | (15 | ) | 44 | - | |||||||||||||||||||||||||
Aegon Asset Management |
604 | 2,047 | (70 | ) | 1,136 | (47 | ) | 2,778 | 3,030 | (8 | ) | |||||||||||||||||||||||||
Total net deposits |
826 | 2,233 | (63 | ) | 1,208 | (32 | ) | 3,204 | 3,191 | - | ||||||||||||||||||||||||||
Revenue-generating investments
|
||||||||||||||||||||||||||||||||||||
|
Sept. 30, 2013 |
|
|
Jun. 30, 2013 |
|
% | |
Dec. 31, 2012 |
|
% | ||||||||||||||||||||||||||
Revenue-generating investments (total) |
69,197 | 69,007 | - | 68,733 | 1 | |||||||||||||||||||||||||||||||
Investments general account |
3,341 | 3,290 | 2 | 3,408 | (2 | ) | ||||||||||||||||||||||||||||||
Investments for account of policyholders |
6,056 | 5,862 | 3 | 6,024 | 1 | |||||||||||||||||||||||||||||||
Off balance sheet investments third parties |
59,800 | 59,855 | - | 59,301 | 1 |
Page 19 of 23
Market consistent value of new business | ||||||||||||||||||||||||||||||||||||
MCVNB | MCVNB | |||||||||||||||||||||||||||||||||||
EUR millions, after tax | Q3 2013 | Q2 2013 | % | Q3 2012 | % | YTD 2013 | YTD 2012 | % | ||||||||||||||||||||||||||||
Americas |
177 | 114 | 55 | 72 | 146 | 386 | 165 | 134 | ||||||||||||||||||||||||||||
The Netherlands |
70 | 42 | 67 | 59 | 19 | 207 | 116 | 78 | ||||||||||||||||||||||||||||
United Kingdom |
11 | 21 | (48 | ) | 24 | (54 | ) | 53 | 73 | (27 | ) | |||||||||||||||||||||||||
New Markets |
27 | 25 | 8 | 18 | 50 | 73 | 61 | 20 | ||||||||||||||||||||||||||||
Total |
285 | 202 | 41 | 173 | 65 | 719 | 415 | 73 | ||||||||||||||||||||||||||||
Modeled new business, APE and deposits | ||||||||||||||||||||||||||||||||||||
Premium business | Premium business | |||||||||||||||||||||||||||||||||||
APE | APE | |||||||||||||||||||||||||||||||||||
EUR millions | Notes | Q3 2013 | Q2 2013 | % | Q3 2012 | % | YTD 2013 | YTD 2012 | % | |||||||||||||||||||||||||||
9 | ||||||||||||||||||||||||||||||||||||
Americas |
264 | 279 | (5 | ) | 283 | (7 | ) | 848 | 843 | 1 | ||||||||||||||||||||||||||
The Netherlands |
45 | 75 | (40 | ) | 49 | (8 | ) | 208 | 192 | 8 | ||||||||||||||||||||||||||
United Kingdom |
205 | 294 | (30 | ) | 183 | 12 | 785 | 604 | 30 | |||||||||||||||||||||||||||
New Markets |
95 | 93 | 2 | 52 | 83 | 296 | 338 | (12 | ) | |||||||||||||||||||||||||||
Total |
609 | 741 | (18 | ) | 567 | 7 | 2,137 | 1,977 | 8 | |||||||||||||||||||||||||||
Deposit business | Deposit business | |||||||||||||||||||||||||||||||||||
Deposits | Deposits | |||||||||||||||||||||||||||||||||||
EUR millions | Notes | Q3 2013 | Q2 2013 | % | Q3 2012 | % | YTD 2013 | YTD 2012 | % | |||||||||||||||||||||||||||
9 | ||||||||||||||||||||||||||||||||||||
Americas |
7,050 | 5,507 | 28 | 5,800 | 22 | 17,075 | 15,944 | 7 | ||||||||||||||||||||||||||||
The Netherlands |
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||
United Kingdom |
- | - | - | 5 | - | 2 | 23 | (91 | ) | |||||||||||||||||||||||||||
New Markets |
273 | 270 | 1 | 125 | 118 | 754 | 428 | 76 | ||||||||||||||||||||||||||||
Total |
7,323 | 5,777 | 27 | 5,930 | 23 | 17,831 | 16,395 | 9 | ||||||||||||||||||||||||||||
MCVNB/PVNBP summary | ||||||||||||||||||||||||||||||||||||
Premium business | Premium business | |||||||||||||||||||||||||||||||||||
MCVNB | PVNBP | MCVNB / PVNBP |
MCVNB / APE |
MCVNB | PVNBP | MCVNB / PVNBP |
MCVNB / APE |
|||||||||||||||||||||||||||||
EUR millions | Notes | Q3 2013 | % | % | YTD 2013 | % | % | |||||||||||||||||||||||||||||
10 | ||||||||||||||||||||||||||||||||||||
Americas |
62 | 1,122 | 5.6 | 23.5 | 171 | 3,624 | 4.7 | 20.1 | ||||||||||||||||||||||||||||
The Netherlands |
71 | 1,221 | 5.8 | 157.0 | 210 | 3,505 | 6.0 | 100.9 | ||||||||||||||||||||||||||||
United Kingdom |
11 | 1,412 | 0.8 | 5.5 | 53 | 5,253 | 1.0 | 6.7 | ||||||||||||||||||||||||||||
New Markets |
28 | 799 | 3.6 | 30.1 | 75 | 2,508 | 3.0 | 25.4 | ||||||||||||||||||||||||||||
Total |
172 | 4,554 | 3.8 | 28.3 | 509 | 14,890 | 3.4 | 23.8 | ||||||||||||||||||||||||||||
Deposit business | Deposit business | |||||||||||||||||||||||||||||||||||
MCVNB | PVNBP | MCVNB / PVNBP |
MCVNB / Deposits |
MCVNB | PVNBP | MCVNB / PVNBP |
MCVNB / Deposits |
|||||||||||||||||||||||||||||
EUR millions | Notes | Q3 2013 | % | % | YTD 2013 | % | % | |||||||||||||||||||||||||||||
10 | ||||||||||||||||||||||||||||||||||||
Americas |
115 | 10,670 | 1.1 | 1.6 | 215 | 26,225 | 0.8 | 1.3 | ||||||||||||||||||||||||||||
The Netherlands |
(1 | ) | 137 | (0.8 | ) | - | (3 | ) | 220 | (1.4 | ) | - | ||||||||||||||||||||||||
United Kingdom |
- | - | - | - | - | 2 | - | - | ||||||||||||||||||||||||||||
New Markets |
(1 | ) | 300 | (0.2 | ) | (0.2 | ) | (2 | ) | 884 | (0.3 | ) | (0.3 | ) | ||||||||||||||||||||||
Total |
113 | 11,107 | 1.0 | 1.5 | 210 | 27,331 | 0.8 | 1.2 |
Page 20 of 23
Notes:
1) | For segment reporting purposes underlying earnings before tax, net underlying earnings, commissions and expenses, operating expenses, income tax (including joint ventures (jvs) and associated companies), income before tax (including jvs and associated companies) and market consistent value of new business are calculated by consolidating on a proportionate basis the revenues and expenses of jvs and Aegons associated companies in Spain, India, Brazil and Mexico. Aegon believes that its non-IFRS measures provide meaningful information about the underlying operating results of its business including insight into the financial measures that Aegons senior management uses in managing its business. Among other things, Aegons senior management is compensated based in part on Aegons results against targets using the non-IFRS measures presented here. While other insurers in Aegons peer group present substantially similar non-IFRS measures, the non-IFRS measures presented in this document may nevertheless differ from the non-IFRS measures presented by other insurers. There is no standardized meaning to these measures under IFRS or any other recognized set of accounting standards and readers are cautioned to consider carefully the different ways in which Aegon and its peers present similar information before comparing them. |
Aegon believes the non-IFRS measures shown herein, when read together with Aegons reported IFRS financial statements, provide meaningful supplemental information for the investing public to evaluate Aegons business after eliminating the impact of current IFRS accounting policies for financial instruments and insurance contracts, which embed a number of accounting policy alternatives that companies may select in presenting their results (i.e. companies can use different local GAAPs) and that can make the comparability from period to period difficult. |
For a definition of underlying earnings and the reconciliation from underlying earnings before tax to income before tax, being the most comparable IFRS measure, reference is made to Note 3 Segment information of Aegons condensed consolidated interim financial statements. |
2) | This note is not being used. |
3) | Sales is defined as new recurring premiums plus 1/10 of single premiums plus 1/10 of gross deposits plus new premium production accident and health plus new premium production general insurance. |
4) | The present value, at point of sale, of all cashflows for new business written during the reporting period, calculated using approximate point of sale economics assumptions. Market consistent value of new business is calculated using a risk neutral approach, ignoring the investment returns expected to be earned in the future in excess of risk free rates (swap curves), with the exeption of an allowance for liquidity premium. The market consistent value of new business is calculated on a post tax basis, after allowing for the time value financial options and guarentees, a market value margin for non-hedgeable financial and non-financial risks and the costs of non-hedgeable stranded capital. |
5) | Return on equity is calculated by dividing the net underlying earnings after cost of leverage by the average shareholders equity excluding the preferred shares, the revaluation reserve and the reserves related to defined benefit plans. |
6) | This note is not being used. |
7) | Included in other income/(charges) are charges made to policyholders with respect to income tax in the United Kingdom. |
8) | Includes production on investment contracts without a discretionary participation feature of which the proceeds are not recognized as revenues but are directly added to Aegons investment contract liabilities. |
9) | APE = recurring premium + 1/10 single premium. |
10) | PVNBP: Present value of new business premiums (PVNBP) is the premiums for the new business sold during the reporting period, projected using assumptions and projection periods that are consistent with those used to calculate the market consistent value of new business, discounted back to point of sale using the swap curve (plus liquidity premium where applicable). |
11) | Reconciliation of operating expenses, used for segment reporting, to Aegons IFRS based operating expenses. |
Q3 2013 | YTD 2013 | |||||||||||||
Employee expenses |
502 |