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AEGON Significantly Improves Earnings in First Quarter of 2009
- Underlying Loss Before Tax of EUR 22 Million Due Primarily to Lower Equity Markets
- Impairments of EUR 386 Million Contribute to Net Loss of EUR 173 Million
- New Life Sales of EUR 543 Million; Total Gross Deposits of EUR 8.2 Billion; Net Deposits of EUR 1.1 billion, Excluding Institutional Guaranteed Products
- Value of New Business of EUR 201 Million
- Excess Capital Over AA Capital Adequacy Requirements of EUR 2.7 Billion
- IGD (a) Solvency Ratio of Approximately 170%
- Core capital (b) of EUR 16.4 Billion, Excluding Revaluation Reserve at the End of Q1 2009 (EUR 7.9 Billion Including Revaluation Reserve)
THE HAGUE, The Netherlands, May 14 /PRNewswire-FirstCall/ --
Statement Alex Wynaendts, CEO
"Despite the persistent challenges of the financial crisis, AEGON significantly improved earnings compared to the second half of 2008. Although we posted a net loss in the first quarter, we are encouraged by the improvement in earnings and the indications that the fundamentals of our business remain sound.
"We continue to focus on freeing up capital from our businesses, reducing
costs, and taking measures to counter the effects of the current environment.
Consequently, we released an additional
"The relatively stable new life sales and deposits quarter-over-quarter reflect the strength of AEGON's franchise and the continued confidence of our customers."
KEY PERFORMANCE INDICATORS
amounts in EUR millions Notes Q1 2009 Q4 2008 Q1 2008
Underlying earnings before tax 1 (22) (181) 658
Net income 2 (173) (1,182) 153
New life sales 3 543 598 686
Total deposits 4 8,241 11,933 8,636
Value of new business (VNB) 201 233 186
Return on equity 5 (3.3%) (8.7%) 13.2%
a) The calculation of the IGD (Insurance Group Directive) capital surplus and ratio is based on Solvency I capital requirements on IFRS for entities within the EU (Pillar I for AEGON UK), and local regulatory solvency measurements for non-EU entities. Specifically, required capital for the life insurance companies in the US is calculated as two times the upper end of the Company Action Level range (200%) as applied by the National Association of Insurance Commissioners in the US.
b) Core capital is the sum of shareholders' equity and the
Last year, AEGON set out three long-term strategic priorities:
1. To reallocate capital toward businesses with higher growth and return
prospects;
2. To improve growth and returns from existing businesses;
3. To manage AEGON as an international company.
Subsequently AEGON identified and announced three priorities to counter the challenges of the current global financial crisis and position the company for growth:
- Focus on capital preservation and accelerate the capital release
program;
- EUR 150 million cost savings measures for 2009;
- Develop contingency plans for deterioration in financial markets.
As announced last June, AEGON is conducting an ongoing review of its
portfolio of businesses to ensure that they meet the criteria outlined in the
strategy. On
Capital preservation
In the current economic environment, acceleration of capital preservation actions has been a priority. The actions taken and plans to be executed are
evidence of the financial flexibility within AEGON to manage through these extraordinary times. They include:
- Releasing EUR 1.7 billion of capital in the second half of 2008;
- Commitment to release an additional EUR 1.5 billion of capital in 2009,
including EUR 0.3 billion from AEGON's institutional business. EUR 0.9
billion has been realized in Q1 2009.
As a result of actions taken, the capital position of the company remains strong with excess capital of
EUR 2.7 billion over AA capital adequacy requirements at March 31, 2009.
Cost measures
AEGON announced cost savings measures totaling
- Americas: no wage increases in 2009, staff reductions, deferred hiring,
reorganization of agency distribution;
- The Netherlands: reduction of contract services, process
re-engineering, general cost savings;
- United Kingdom: restructuring of IT, marketing and customer services,
cost containment and savings in distribution.
AEGON's cost measures are on track with approximately one third of the total expense savings of 2009 realized across the company in the first quarter of 2009.
Capital management
Excess capital
During Q1 2009 financial markets remained challenging. Equity markets
showed a negative return, the S&P 500 lost 12% in the quarter, and real estate
prices also continued to decline. Except for some structured asset classes,
spreads in many credit market segments, though volatile during the quarter and
still at historically high and stressed levels, were tighter or stable when
compared to 2008 year-end levels. Volatilities in equity and bond markets were
down from the peaks recorded late 2008, while interest rates gradually
increased from historic lows. The negative impact from capital markets on
AEGON's excess capital in Q1 2009 was estimated at
The world economic outlook for 2009 remains uncertain and most countries
are facing a severe recession. Though policymakers continue to respond
aggressively to the economic crisis, specifically in
In addition, rating agencies have been responding to the economic environment, revising their credit risk assessments. In Q1 2009, for example, parts of AEGON's mortgage-related asset portfolio, in particular securities backed by near-prime mortgages referred to as Alt-A and negative amortization/Option ARM floaters, were downgraded to below investment grade ratings. The rating migration of AEGON's
US portfolio led to higher capital requirements, reducing AEGON's excess
capital by an estimated
AEGON has preserved capital over the last few quarters and continues to
focus on freeing up capital from its businesses. Part of the
This investment strategy, executed in the last few quarters, has been successful in a period of widening credit spreads across fixed income markets, and has helped managing the maturity mismatch as a result of institutional spread liabilities getting shorter as puts have been exercised. At the same time, some structured assets classes have experienced extension of duration. As a result of this investment strategy, AEGON has not been a forced seller of assets at depressed prices. This strategy has preserved value, even though currently the return on short-dated and government investments is lower. Going forward, AEGON will continue to manage its credit portfolio actively. However, with current market conditions and the maturity of assets and liabilities of institutional spread business closer aligned now, AEGON will start to put part of the new money inflows into highly rated credit investments.
At the end of Q1 2009, AEGON had
IFRS core capital
At the end of
AEGON's revaluation account decreased during
Q1 2009 by
FINANCIAL OVERVIEW
At constant
currency
EUR millions Notes Q1 2009 Q1 2008 % %
Underlying earnings before
tax by line of business
Life and protection 239 252 (5) (11)
Individual savings and
retirement products (313) 116 N.M. N.M.
Pensions and asset management 42 121 (65) (64)
Institutional products 89 108 (18) (28)
Life reinsurance (23) 43 N.M. N.M.
Distribution 6 9 (33) (44)
General insurance (1) 17 N.M. N.M.
Interest charges and other (63) (17) N.M. N.M.
Share in net results of associates 2 9 (78) (78)
Underlying earnings before tax (22) 658 N.M. N.M.
Over/(under) performance of
fair value items (197) (441) 55
Operating earnings before tax (219) 217 N.M. N.M.
Operating earnings before
tax by line of business
Life and protection 179 213 (16) (22)
Individual savings
and retirement products (306) (58) N.M. N.M.
Pensions and asset management (135) (19) N.M. N.M.
Institutional products 13 (55) N.M. N.M.
Life reinsurance 59 31 90 65
Distribution 6 9 (33) (44)
General insurance (1) 17 N.M. N.M.
Interest charges and other (36) 70 N.M. N.M.
Share in net results of associates 2 9 (78) (78)
Operating earnings before tax (219) 217 N.M. N.M.
Gains/(losses) on investments 173 86 101 100
Impairment charges (386) (32) N.M. N.M.
Other income/(charges) (23) (54) 57 46
Income before tax (455) 217 N.M. N.M.
Income tax 282 (64) N.M. N.M.
Net income (173) 153 N.M. N.M.
Net underlying earnings (14) 503 N.M. N.M.
Net operating earnings (163) 175 N.M. N.M.
Underlying earnings geographically
Americas (68) 478 N.M. N.M.
The Netherlands 72 113 (36) (36)
United Kingdom 7 45 (84) (88)
Other countries 30 39 (23) (10)
Holding and other (63) (17) N.M. N.M.
Underlying earnings before tax (22) 658 N.M. N.M.
Operating earnings geographically
Americas (100) 104 N.M. N.M.
The Netherlands (118) (41) (188) (188)
United Kingdom 4 45 (91) (88)
Other countries 31 39 (21) (10)
Holding and other (36) 70 N.M. N.M.
Operating earnings before tax (219) 217 N.M. N.M.
Commissions and expenses 1,618 1,416 14 8
of which operating expenses 842 783 8 4
Overview
AEGON reported a net loss for Q1 2009 of
Underlying earnings before tax of minus
Fair value items, which primarily include certain investment classes in
Net income was also negatively impacted by impairment charges (
Gains on investments totaled
The underlying loss in Q1 2009, as well as impairments and mark-to-market
losses on the fair value items, resulted in a tax benefit of
Underlying earnings before tax
In Q1 2009 the underlying loss for the company amounted to
The underlying loss in the Americas was
Underlying earnings in the Americas in Q1 2009 were also affected by the decisions to lower the allocation to hedge funds and increase the asset allocation to cash, treasury and agency bonds, in order to preserve capital.
In
Underlying earnings in the
Underlying earnings from Other countries amounted to
Net income
Net income included a total underperformance result on fair value items of
In Q1 2009, underperformance of alternative investment classes in the
Americas, in particular real estate as well as private equity and credit
derivatives amounted to
Fair value items also include the under/overperformance on assets held at
fair value through profit or loss and backing liabilities of a specific
portfolio of group pension contracts in
In order to maintain consistency in definitions, starting in Q4 2008, the
net impact of the fair value movements of guarantees and the related hedges in
Previously, differences in fair value between guarantees and related hedges, referred to as hedge ineffectiveness, were reported in gains/losses on investments. Results for prior years have been adjusted (see Financial Supplement).
Net fair value gains of
The fair valuation of certain products with guarantees includes a credit spread in the discount rates, a reflection of dislocated, volatile and illiquid markets.
Gains on investments
Gains on investments of
Impairment charges
Impairments of
Tax
The underlying loss in Q1 2009, as well as impairments and mark-to-market
losses on the fair value items, resulted in a tax benefit of
Commissions and expenses
Compared to Q4 2008 commissions and expenses decreased by 13% to
Compared to Q1 2008 commissions and expenses increased by 14% (8% at constant currency), primarily due to acceleration of DPAC amortization.
Operating expenses increased by 8% (4% at constant currency) compared to
Q1 2008. An increase in employee benefit pension expenses and restructuring
expenses in several businesses offset expense savings from cost savings
programs. Operating expenses also increased as a result of acquisitions in
Central &
Sales
Total new life sales in Q1 2009 were down 9% compared to Q4 2008, and
decreased by 15% (at constant currency) to
New life sales in the Americas were down 11% compared to Q4 2008 and 31% compared to Q1 2008 in local currency, due to lower universal life sales in the high net worth and variable life sales in the middle market as well as lower sales of bank-owned and corporate-owned life insurance (BOLI/COLI) contracts. Life reinsurance sales were down as well compared to last year, but were in line with previous quarters.
In
New life sales in the
In Other countries new life sales in Q1 2009 were down 14% compared to Q4
2008 and down 11% compared to Q1 2008. New life sales in
SALES
At
constant
currency
EUR millions Notes Q1 2009 Q1 2008 % %
New life sales
Life single premiums 2,025 2,757 (27) (16)
Life recurring premiums annualized 341 410 (17) (13)
Total recurring plus 1/10 single 543 686 (21) (15)
New premium production accident
and health insurance 164 166 (1) (13)
New premium production
general insurance 12 16 (25) (19)
Gross deposits (on and off balance)
by line of business
Fixed annuities 1,628 306 N.M. N.M.
Variable annuities 714 685 4 (6)
Saving deposits 580 648 (10) (10)
Retail mutual funds 642 564 14 (4)
Pensions and asset management 2,829 3,183 (11) (19)
Institutional guaranteed products 1,848 3,249 (43) (51)
Life reinsurance 0 1 N.M. N.M.
Total gross deposits 8,241 8,636 (5) (15)
Total gross deposits excl.
institutional guaranteed products 6,393 5,387 19 7
Net deposits (on and off
balance) by line of business
Fixed annuities 688 (795) N.M. N.M.
Variable annuities 78 (152) N.M. N.M.
Saving deposits (67) (72) 7 7
Retail mutual funds (98) 171 N.M. N.M.
Pensions and asset management 506 1,170 (57) (70)
Institutional guaranteed products (2,354) (1,195) (97) (71)
Life reinsurance (16) (15) (7) 7
Total net deposits (1,263) (888) (42) (34)
Total net deposits excl.
institutional guaranteed products 1,091 307 N.M. 178
REVENUE GENERATING INVESTMENTS
At Mar. At Dec.
31 31
2009 2008 %
Revenue generating investments (total) 334,280 331,844 1
Investments general account 133,130 130,481 2
Investments for account of policyholders 103,312 105,400 (2)
Off balance sheet investments third parties 97,838 95,963 2
Sales through Caja de Ahorros del Mediterraneo (CAM), AEGON's largest bank
partner in
In Central &
In
Deposits
Total gross deposits excluding institutional guaranteed products were up
19% to
Fixed annuities sales in the Americas continued to be strong. AEGON continues to expect these sales to decrease during the remainder of the year. Variable annuity sales in the Americas were in line with sales in the last few quarters. Sales of retirement plans in the pension business were strong, particularly when taking into account the impact of lower financial markets on the balances taken over. Managed assets and retail mutual fund sales were down as a result of the turmoil in financial markets.
Gross deposits in Other countries tripled to
Net deposits amounted to approximately
Value of new business
The value of new business (VNB) for the company was up 8% compared to Q1
2008. VNB was up due to increases in
FINANCIAL OVERVIEW, Q1 2009 GEOGRAPHICALLY
Amounts in EUR (unless stated otherwise)
United
Americas Kingdom The
USD GBP Americas Netherlands
Underlying earnings
before tax by line
of business
221 7 Life and protection 169 55
Individual savings
and retirement
(403) 0 products (309) (9)
Pensions and asset
10 3 Management 8 26
117 0 Institutional products 89 0
(30) 0 Life reinsurance (23) 0
0 (3) Distribution 0 9
0 0 General insurance 0 (9)
Interest charges and
other
Share in net results of
(3) 0 associates (2) 0
Underlying earnings
(88) 7 before tax (68) 72
Over/(under) performance
(42) (3) of fair value items (32) (190)
Operating earnings
(130) 4 before tax (100) (118)
Operating earnings
before tax by line of
business
176 7 Life and protection 135 29
Individual savings
and retirement
(394) 0 products (303) (9)
Pensions and asset
(3) 0 management (2) (138)
18 0 Institutional products 13 0
76 0 Life reinsurance 59 0
0 (3) Distribution 0 9
0 0 General insurance 0 (9)
Interest charges and
other
Share in net results
(3) 0 of associates (2) 0
Operating earnings
(130) 4 before tax (100) (118)
Gains/(losses) on
36 9 investments 28 110
(370) (13) Impairment charges (284) (78)
Other income/
1 (22) (charges) 1 0
(463) (22) Income before tax (355) (86)
290 27 Income tax 222 45
(173) 5 Net income (133) (41)
Net underlying
(57) 10 earnings (44) 55
Net operating
(90) 8 earnings (69) (87)
- Table Continued -
Holding,
other
United Other activities & Total
Kingdom countries eliminations EUR
Underlying earnings
before tax by line
of business
Life and protection 7 8 0 239
Individual savings
and retirement products 0 5 0 (313)
Pensions and asset
management 3 5 0 42
Institutional products 0 0 0 89
Life reinsurance 0 0 0 (23)
Distribution (3) 0 0 6
General insurance 0 8 0 (1)
Interest charges
and other (63) (63)
Share in net results
of associates 0 4 0 2
Underlying earnings
before tax 7 30 (63) (22)
Over/(under) performance
of fair value items (3) 1 27 (197)
Operating earnings
before tax 4 31 (36) (219)
Operating earnings
before tax by line
of business
Life and protection 7 8 0 179
Individual savings
and retirement products 0 6 0 (306)
Pensions and asset
management 0 5 0 (135)
Institutional products 0 0 0 13
Life reinsurance 0 0 0 59
Distribution (3) 0 0 6
General insurance 0 8 0 (1)
Interest charges
and other (36) (36)
Share in net results
of associates 0 4 0 2
Operating earnings
before tax 4 31 (36) (219)
Gains/(losses) on
investments 10 4 21 173
Impairment charges (14) (5) (5) (386)
Other income/(charges) (24) 0 0 (23)
Income before tax (24) 30 (20) (455)
Income tax 30 (21) 6 282
Net income 6 9 (14) (173)
Net underlying earnings 11 9 (45) (14)
Net operating earnings 9 10 (26) (163)
- Underlying loss of USD 88 million; USD 600 million impact from decline
in equity markets
- Negative contribution of fair value items of USD 42 million on lower
real estate values offset by positive impact from fair value GMWB
guarantees and related hedges
- Impairments of USD 370 million
- Strong sales of fixed annuities and retirement plan sales; net deposits
USD 1.6 billion (excl. institutional guaranteed products)
Overview
The decline in equity markets in Q1 2009 had a significant impact (approx.
Results in the Americas also included
Sales of fixed annuities continued to be strong during the quarter. AEGON continues to expect these sales to decrease during the remainder of the year. Sales of variable annuities were consistent with sales in the last few quarters. New life sales were down in all lines of business. Sales of retirement plans in the pension business were strong, particularly when taking into account the impact of lower financial markets on the balances taken over.
Value of new business was down 13%, reflecting reduced institutional sales, and lower VNB of life and protection, but higher VNB from fixed annuities and pensions.
Underlying earnings before tax
AEGON reported an underlying loss before tax in the Americas for Q1 2009
of
- Earnings from Life & Protection declined 19% compared to Q1 2008 to USD
221 million, and include an USD 25 million persistency related charge
following the decline in equity markets this quarter. Earnings also
include USD 26 million of increased employee pension expenses. In Q1
2008 underlying earnings included exceptional unfavorable mortality
charges of USD 34 million;
- Individual Savings & Retirement earnings came in at a loss of USD 403
million, due to the equity market impact on fee income, minimum
guarantee reserve strengthening and accelerated DPAC amortization (in
total USD 460 million). In addition, changes in lapse assumptions
affected earnings by USD 75 million;
- Pensions & Asset Management earnings decreased to USD 10 million, a
result primarily of lower fees from reduced asset balances;
- Earnings from the Institutional business were down 28% to USD 117
million. A decrease in short-term rates continued to produce more
positive spreads on institutional guaranteed products, offset, however,
by spread compression from the higher asset allocation to cash and
restructuring costs following the decision to downsize the
institutional business;
- In the Life Reinsurance business the underlying loss amounted to USD 30
million, including a USD 40 million impact from lower equity markets
and unfavorable mortality (USD 26 million).
Net income
AEGON reported a net loss for Q1 of USD 173 million in the Americas.
Fair value items showed an underperformance of
Results in the Americas also included
The high effective tax rate is mainly a result of the tax benefits for permanent differences and tax credits which increase the effective tax rate in the current overall pre-tax loss situation. In addition, pre-tax earnings from Ireland being taxed at their lower rate also resulted in an increase in the effective tax rate in the current overall pre-tax loss situation.
Commissions and expenses
Total commissions and expenses increased 12% in Q1, primarily due to
acceleration of DPAC amortization. Q1 operating expenses were up 3%. An
increase in employee pension plan costs (
Sales and deposits
Total new life sales in the Americas were down 31% in the quarter, driven primarily by a decline in universal life sales in the high net worth market and variable life sales in the middle market. Retail life sales were in line with Q4 2008. The BOLI/COLI market has declined significantly as a result of the financial crisis and its impact on banks. Life reinsurance sales were down as well compared to last year, but were in line with previous quarters.
Total gross deposits, excluding institutional guaranteed products, were in
line with Q1 2008 and increased by 2% compared to Q4 2008. Net deposits
excluding institutional guaranteed products were up significantly to
Fixed annuities sales came in strong again after several quarters of growth. AEGON continues to expect these sales to decrease during the remainder of the year. Variable annuity sales were in line with sales in the last few quarters, while retail mutual fund sales suffered from lower financial markets as expected.
Sales of retirement plans in the pension business were strong, particularly when taking into account the impact of lower financial markets on the balances taken over. Managed assets clearly declined also because of financial market turmoil.
Sales of institutional guaranteed products are low, after the decision to downsize the institutional spread based business.
Sales of accident and health products were in line with sales over the
last few quarters.
Value of new business
The value of new business (VNB) in the Americas amounted to
Revenue generating investments
AEGON's total revenue generating investments at the end of
AMERICAS - EARNINGS
Q1 Q1
USD millions Notes 2009 2008 %
Underlying earnings before tax
by line of business
Life 153 159 (4)
Accident and health 68 115 (41)
Life and protection 221 274 (19)
Fixed annuities 86 95 (9)
Variable annuities (480) 70 N.M.
Retail mutual funds (9) 4 N.M.
Individual savings and retirement
products (403) 169 N.M.
Pensions and asset management 10 45 (78)
Institutional guaranteed products 105 141 (26)
BOLI/COLI 12 21 (43)
Institutional products 117 162 (28)
Life reinsurance (30) 65 N.M.
Share in net results of associates (3) 1 N.M.
Underlying earnings before tax (88) 716 N.M.
Over/(under) performance of fair
value items (42) (560) 93
Operating earnings before tax (130) 156 N.M.
Operating earnings before tax
by line of business
Life 120 135 (11)
Accident and health 56 109 (49)
Life and protection 176 244 (28)
Fixed annuities 41 8 N.M.
Variable annuities (426) (103) N.M.
Retail mutual funds (9) 4 N.M.
Individual savings and retirement
products (394) (91) N.M.
Pensions and asset management (3) 38 N.M.
Institutional guaranteed products 8 (99) N.M.
BOLI/COLI 10 17 (41)
Institutional products 18 (82) N.M.
Life reinsurance 76 46 65
Share in net results of associates (3) 1 N.M.
Operating earnings before tax (130) 156 N.M.
Gains/(losses) on investments 36 (71) N.M.
Impairment charges (370) (21) N.M.
Other income/(charges) 1 0 N.M.
Income before tax (463) 64 N.M.
Income tax 290 (103) N.M.
Net income (173) (39) N.M.
Net underlying earnings (57) 522 N.M.
Net operating earnings (90) 111 N.M.
Commissions and expenses 1,311 1,169 12
of which operating expenses 562 547 3
For the amounts in euro see the Financial Supplement.
AMERICAS - SALES
Q1 Q1
USD millions Notes 2009 2008 %
New life sales
Life single premiums 91 241 (62)
Life recurring premiums annualized 173 238 (27)
Total recurring plus 1/10 single 182 262 (31)
Life 128 187 (32)
BOLI/COLI 2 14 (86)
Life reinsurance 52 61 (15)
Total recurring plus 1/10 single 182 262 (31)
New premium production accident
and health insurance 203 237 (14)
Gross deposits (on and off balance)
by line of business
Fixed annuities 2,120 459 N.M.
Variable annuities 780 974 (20)
Retail mutual funds 307 773 (60)
Pensions and asset management 3,169 4,252 (25)
Institutional guaranteed products 2,407 4,870 (51)
Life reinsurance 0 2 N.M.
Total gross deposits 8,783 11,330 (22)
Total gross deposits excl. institutional
guaranteed products 6,376 6,460 (1)
Net deposits (on and off balance)
by line of business
Fixed annuities 896 (1,192) N.M.
Variable annuities (40) (279) 86
Retail mutual funds (256) 247 N.M.
Pensions and asset management 1,053 1,644 (36)
Institutional guaranteed products (3,065) (1,792) (71)
Life reinsurance (20) (23) 13
Total net deposits (1,432) (1,395) (3)
Total net deposits excl. institutional
guaranteed products 1,633 397 N.M.
REVENUE GENERATING INVESTMENTS
At Mar. At Mar.
31 31
2009 2008 %
Revenue generating investments
(total) 279,399 286,167 (2)
Investments general account 117,934 120,790 (2)
Investments for account of
policyholders 55,791 58,943 (5)
Off balance sheet investments
third parties 105,674 106,434 (1)
For the amounts in euro see the Financial Supplement.
- Underlying earnings declined 36% to EUR 72 million
- Life sales down 13%, due to decline in retail market; group pension
sales were strong
- Value of new business of EUR 31 million; internal rate of return of
14.1%
Overview
Fair value items underperformed long-term expectations, a result mainly from differences in fair value between guarantees and related hedges, referenced as hedge ineffectiveness.
Impairments, primarily on equity investments, totaled
Underlying earnings before tax
- The Life business reported earnings of EUR 44 million, up from last
year on higher investment income offset by lower technical results.
- In Accident and Health underlying earnings were EUR 11 million, an
increase of EUR 3 million, mainly a result of a technical provision
release.
- The Savings business reported a loss of EUR 9 million, due to pressure
on margins and volumes from fierce competition in the savings market.
- Earnings from Pensions & Asset Management amounted to EUR 26 million
down from Q1 2008, primarily the result of lower investment income.
- Earnings from Distribution amounted to EUR 9 million, below last year's
result due to the slowdown in the real estate market.
- General insurance earnings were down significantly to a loss of EUR 9
million, due mainly to higher claims experience.
Net income
Fair value items include the under/overperformance on assets held at fair
value through profit and loss, backing liabilities of a specific portfolio of
group pension contracts held in the general account. In Q1 2009 these assets
underperformed long-term expected returns by
Also, in order to maintain consistency in definitions, starting in Q4
2008, the net impact of the fair value movements of guarantees and the related
hedges has been included in fair value items. Previously, differences in fair
value between guarantees and related hedges, referenced as hedge
ineffectiveness, were reported in gains/losses on investments. Earnings in Q1
2009 include a
Impairments of
The positive contribution from tax is due to tax deductable impairments and losses on fair value items, as well as tax exempt income. The high effective tax rate is mainly a result of the tax exempt items which increase the effective tax rate in the current overall pre-tax loss situation.
Commissions and expenses
Commissions and expenses were down 1% and operating expenses decreased also by 1%. Higher expenses for employee benefits were offset by lower project related expenses.
Sales and deposits
Pension sales were in line with last year due to several large contracts sold during the quarter. Renewal rates in the pension business continued to improve. Sales of both single and regular premium individual life products were down compared to last year, following increased pricing competition in the immediate annuity market, as well as lower demand for regular premium products. Sales in accident & health were up as a result of higher sales of alternative disability products to WIA product. Sales of general insurance products were down on last year due to the competitive market.
Gross deposits were down by 15% compared with Q1 2008, due to fierce competition. Net deposits in the savings business improved significantly compared to Q4 2008.
Value of new business
The value of new business (VNB) increased to
Please refer to page 29 for more detailed information on VNB.
Revenue generating investments
At the end of
THE NETHERLANDS - EARNINGS
Q1 Q1
EUR millions Notes 2009 2008 %
Underlying earnings before tax
by line of business
Life 44 32 38
Accident and health 11 8 38
Life and protection 55 40 38
Saving products (9) 1 N.M.
Individual savings and retirement
products (9) 1 N.M.
Pensions and asset management 26 51 (49)
Distribution 9 11 (18)
General insurance (9) 10 N.M.
Underlying earnings before tax 72 113 (36)
Over/(under) performance of fair
value items (190) (154) (23)
Operating earnings before tax (118) (41) (188)
Operating earnings before tax
by line of business
Life 18 13 38
Accident and health 11 8 38
Life and protection 29 21 38
Saving products (9) 1 N.M.
Individual savings and retirement
products (9) 1 N.M.
Pensions and asset management (138) (84) (64)
Distribution 9 11 (18)
General insurance (9) 10 N.M.
Operating earnings before tax (118) (41) (188)
Gains/(losses) on investments 110 76 45
Impairment charges (78) (17) N.M.
Income before tax (86) 18 N.M.
Income tax 45 1 N.M.
Net income (41) 19 N.M.
Net underlying earnings 55 92 (40)
Net operating earnings (87) (22) N.M.
Commissions and expenses 307 310 (1)
of which operating expenses 217 219 (1)
THE NETHERLANDS - SALES
Q1 Q1
EUR millions Notes 2009 2008 %
New life sales
Life single premiums 391 445 (12)
Life recurring premiums annualized 23 26 (12)
Total recurring plus 1/10 single 62 71 (13)
Life 23 31 (26)
Pensions 39 40 (3)
Total recurring plus 1/10 single 62 71 (13)
New premium production accident
and health insurance 7 6 17
New premium production general
insurance 7 8 (13)
Gross deposits (on and off balance)
by line of business
Saving deposits 580 648 (10)
Pensions and asset management 11 47 (77)
Total gross deposits 591 695 (15)
Net deposits (on and off balance)
by line of business
Saving deposits (67) (72) 7
Pensions and asset management (113) 36 N.M.
Total net deposits (180) (36) N.M.
REVENUE GENERATING
INVESTMENTS
At Mar. At Mar.
31 31
2009 2008 %
Revenue generating investments
(total) 63,427 63,079 1
Investments general account 32,875 32,163 2
Investments for account of
policyholders 19,357 19,133 1
Off balance sheet investments
third parties 11,195 11,783 (5)
- Underlying earnings before tax declined to GBP 7 million on lower fund
related charges in the pension business
- New life sales down 9% on lower bond and pension sales, offsetting
sales increases in annuities
- Margins and volume in the annuity business drive value of new business
increase
Overview
Lower bond and equity markets compared to Q1 last year led to a decline in underlying earnings. Increases in sales of annuities and group pensions were
more than offset by sales declines in offshore bonds and individual pensions. Value of new business continued its recent strong growth, a result primarily of a shift in business mix to higher margin products.
Results from Variable Annuities are included in the Other countries section of the results release from Q1 2009.
Underlying earnings before tax
Underlying earnings before tax declined to
- Earnings from Life & Protection came in at GBP 7 million, slightly
below results in the comparable quarter last year. The continued
positive impact on earnings from business growth was more than offset
by mortality experience and costs related to the expense management
program.
- Earnings from Pensions & Asset Management amounted to GBP 3 million,
down GBP 25 million, due to impact from lower equity and bond markets
on fund related charges;
- Distribution activities in the first quarter experienced a loss of GBP
3 million, primarily a result of more difficult market conditions for
mortgage and investment products.
Net income
Net income was
Commissions and expenses
Total commissions and expenses in the quarter were up 1%, while
commissions were down due to a change in business mix. Operating expenses
increased by 2% to
Sales and deposits
New life sales were down 9% and came in at
Sales were down across most lines of business offsetting continued strong growth in annuities.
- Life annualized premium production increased 29% to GBP 71 million, a
result of continued strong sales of annuities;
- Sales of pensions declined 18% to GBP 194 million as sales of both
group pension and individual pension were down this quarter. In
addition, sales of unit-linked bonds declined, primarily driven by
lower offshore bond sales (see Financial Supplement for more detail).
Total deposits amounted to
Value of new business
The value of new business (VNB) increased 30% to
Please refer to page 29 for more detailed information on VNB.
Revenue generating investments
At the end of
UNITED KINGDOM - EARNINGS
Q1 Q1
GBP millions Notes 2009 2008 %
Underlying earnings before tax
by line of business
Life 7 8 (13)
Life and protection 7 8 (13)
Pensions and asset management 3 28 (89)
Distribution (3) (2) (50)
Underlying earnings before tax 7 34 (79)
Over/(under) performance of fair
value items (3) 0 N.M.
Operating earnings before tax 4 34 (88)
Operating earnings before tax
by line of business
Life 7 8 (13)
Life and protection 7 8 (13)
Pensions and asset management 0 28 N.M.
Distribution (3) (2) (50)
Operating earnings before tax 4 34 (88)
Gains/(losses) on investments 9 2 N.M.
Impairment charges (13) 0 N.M.
Other income/(charges) 9 (22) (41) 46
Income before tax (22) (5) N.M.
Income tax attributable to policyholder
return 22 41 (46)
Income before income tax on
shareholders return 0 36 N.M.
Income tax on shareholders return 5 (5) N.M.
Net income 5 31 (84)
Net underlying earnings 10 30 (67)
Net operating earnings 8 30 (73)
Commissions and expenses 159 157 1
of which operating expenses 100 98 2
For the amounts in euro see the Financial Supplement.
UNITED KINGDOM - SALES
Q1 Q1
GBP millions Notes 2009 2008 %
New life sales 10
Life single premiums 1,317 1,498 (12)
Life recurring premiums annualized 133 141 (6)
Total recurring plus 1/10 single 265 291 (9)
Life 71 55 29
Pensions 194 236 (18)
Total recurring plus 1/10 single 265 291 (9)
Gross deposits (on and off balance)
by line of business
Pensions and asset management 181 112 62
Total gross deposits 181 112 62
Net deposits (on and off balance)
by line of business
Pensions and asset management (257) (41) N.M.
Total net deposits (257) (41) N.M.
REVENUE GENERATING
INVESTMENTS
At Mar. At Mar.
31 31
2009 2008 %
Revenue generating investments
(total) 44,208 47,122 (6)
Investments general account 5,157 4,964 4
Investments for account of
policyholders 37,188 39,869 (7)
Off balance sheet investments
third parties 1,863 2,289 (19)
For the amounts in euro see the Financial Supplement.
- Underlying earnings before tax declined by 10% at constant currency
- Life sales of EUR 50 million resilient with 11% decline at constant
currency
- Continued strong retail mutual fund sales in China lead to record
deposits of EUR 706 million
- VNB of EUR 33 million, down from last year on lower sales
Overview
Underlying earnings from Other countries amounted to
Life sales were down 11% at constant currency, as declining equity markets
impacted single premium unit-linked sales in
Results from European Variable Annuities are included in the Other countries section of the results release from Q1 2009.
Underlying earnings before tax
Underlying earnings before tax from Other countries declined to
- Earnings from Life & Protection declined mainly as a result of losses
in Asia. In CEE income on unit-linked business was down due to lower
asset balances. In Q1 2008 life earnings from CEE included a one-off
reserve release in Hungary of EUR 4 million;
- The asset management joint venture in China performed well. As a
result, earnings from Individual savings and retirement products
increased to EUR 5 million;
- Pensions & Asset management earnings increased to EUR 5 million as a
result of the inclusion of a Polish pension fund and the introduction
of DPAC in the pension businesses in Hungary and Poland;
- Earnings from General insurance were EUR 8 million, in line with last
year;
- Earnings from associate companies declined due additional start-up
costs at AEGON's joint ventures in India and a lower contribution from
La Mondiale, AEGON's French partner.
Net income
Net income declined by two thirds to
Commissions and expenses
Commissions and expenses rose 8% in Q1 2009 to
Sales and deposits
New life sales in Q1 2009 declined 11% to EUR 50 million.
- In Central & Eastern Europe, sales of recurring premium life insurance
declined 5% as strong performances in the Czech Republic and Slovakia
were offset by declines in Hungary and Poland. Single premium sales
were sharply lower, particularly in Poland, because of continued market
turmoil. Total new life sales in CEE amounted to EUR 16 million, down
24% or 18% at constant currency;
- In Spain, sales of life insurance rose 22% to EUR 22 million, due
primarily to the inclusion of two new joint ventures with regional
savings banks and higher sales of existing joint ventures;
- AEGON's largest bank partner in Spain, which is an associate and
therefore not consolidated, more than tripled sales to EUR 66 million
(on a 100% basis), as a result of an increased focus on risk products
and higher pension (PPA) sales;
- In Asia, new life sales decreased to EUR 12 million as increased sales
in China and India were more than offset by a decline in Taiwan.
Gross deposits tripled to
General insurance
Non-life sales in
Value of new business
The value of new business (VNB) from Other countries was
In both
The internal rate of return in
Please refer to page 29 for more detailed VNB information.
Revenue generating investments
In 1Q 2009, revenue generating investments declined 2% from year-end 2008
levels to
ADD: /FIRST AND FINAL ADD -- LNTH001 -- AEGON N.V./
OTHER COUNTRIES - EARNINGS
Q1 Q1
EUR millions Notes 2009 2008 %
Underlying earnings before tax
by line of business
Life 7 17 (59)
Accident and health 1 2 (50)
Life and protection 8 19 (58)
Variable annuities 0 1 N.M.
Saving products 1 0 N.M.
Retail mutual funds 4 1 N.M.
Individual savings and retirement
products 5 2 150
Pensions and asset management 5 3 67
General insurance 8 7 14
Share in net results of associates 4 8 (50)
Underlying earnings before tax 30 39 (23)
Over/(under) performance of fair
value items 1 0 N.M.
Operating earnings before tax 31 39 (21)
Operating earnings before tax
by line of business
Life 7 17 (59)
Accident and health 1 2 (50)
Life and protection 8 19 (58)
Variable annuities 1 1 0
Saving products 1 0 N.M.
Retail mutual funds 4 1 N.M.
Individual savings and retirement
products 6 2 200
Pensions and asset management 5 3 67
General insurance 8 7 14
Share in net results of associates 4 8 (50)
Operating earnings before tax 31 39 (21)
Gains/(losses) on investments 4 0 N.M.
Impairment charges (5) (1) N.M.
Income before tax 30 38 (21)
Income tax (21) (10) (110)
Net income 9 28 (68)
Net underlying earnings 9 27 (67)
Net operating earnings 10 27 (63)
Commissions and expenses 98 91 8
of which operating expenses 52 43 21
OTHER COUNTRIES - SALES
Q1 Q1
EUR millions Notes 2009 2008 %
New life sales 10
Life single premiums 112 172 (35)
Life recurring premiums annualized 39 39 0
Total recurring plus 1/10 single 50 56 (11)
Life 50 56 (11)
Total recurring plus 1/10 single 50 56 (11)
New premium production accident
and health insurance 2 2 0
New premium production general
insurance 5 8 (38)
Gross deposits (on and off balance)
Variable annuities 115 35 N.M.
Retail mutual funds 406 48 N.M.
Pensions and asset management 185 151 23
Total gross deposits 706 234 N.M.
Net deposits (on and off balance)
Variable annuities 109 34 N.M.
Retail mutual funds 98 6 N.M.
Pensions and asset management 93 92 1
Total net deposits 300 132 127
REVENUE GENERATING INVESTMENTS
At Mar. At Mar.
31 31
2009 2008 %
Revenue generating investments
(total) 13,350 13,609 (2)
Investments general account 6,030 6,243 (3)
Investments for account of
policyholders 2,085 2,067 1
Off balance sheet investments
third parties 5,235 5,299 (1)
NET UNDERLYING EARNINGS GEOGRAPHICALLY
Q1 Q1
EUR millions Notes 2009 2008 %
1
Americas (44) 348 N.M.
The Netherlands 6 55 92 (40)
United Kingdom 11 40 (73)
Other countries 9 27 (67)
Holding and other (45) (4) N.M.
Net underlying earnings (14) 503 N.M.
OVER/UNDER PERFORMANCE OF FAIR VALUE ITEMS
EUR millions
Operating earnings before tax (219) 217 N.M.
(Over)/under performance of fair
value items - Americas 32 374 (91)
(Over)/under performance of fair
value items - The Netherlands 6 190 154 23
(Over)/under performance of fair
value items - United Kingdom 3 0 N.M.
(Over)/under performance of fair
value items - Other countries (1) 0 N.M.
(Over)/under performance of fair
value items - Holding and other (27) (87) 69
Underlying earnings before tax (22) 658 N.M.
Net underlying earnings (14) 503 N.M.
AMERICAS - OVER/UNDER PERFORMANCE OF FAIR VALUE ITEMS
USD millions
Over/(under) performance of fair
value items by line of business
Life and protection (45) (30) (50)
Individual savings and retirement products 9 (260) N.M.
Pensions and asset management (13) (7) (86)
Institutional products (99) (244) 59
Life reinsurance 106 (19) N.M.
Total over/(under) performance of
fair value items (42) (560) 93
Total over/(under) performance of
fair value items in EUR (32) (374) 91
THE NETHERLANDS - OVER/UNDER PERFORMANCE OF FAIR VALUE ITEMS
EUR millions 6
Over/(under) performance of fair
value items by line of business
Life and protection (26) (19) (37)
Pensions and asset management (164) (135) (21)
Total over/(under) performance of
fair value items (190) (154) (23)
UNITED KINGDOM - OVER/UNDER PERFORMANCE OF FAIR VALUE ITEMS
GBP millions
Over/(under) performance of fair
value items by line of business
Pensions and asset management (3) 0 N.M.
Total over/(under) performance of
fair value items (3) 0 N.M.
OTHER COUNTRIES - OVER/UNDER PERFORMANCE OF FAIR VALUE ITEMS
EUR millions
Over/(under) performance of
fair value items by line of business
Variable annuities 1 0 N.M.
Total over/(under) performance of
fair value items 1 0 N.M.
SALES
Q1 Q1
EUR millions 2009 2008 %
New life sales 543 686 (21)
Gross deposits (on and off balance) 8,241 8,636 (5)
New life sales
Life single premiums 2,025 2,757 (27)
Life recurring premiums annualized 341 410 (17)
Total recurring plus 1/10 single 543 686 (21)
Life 249 284 (12)
Pensions 253 352 (28)
BOLI/COLI 1 9 (89)
Life reinsurance 40 41 (2)
Total recurring plus 1/10 single 543 686 (21)
New premium production accident
and health insurance 164 166 (1)
New premium production general
insurance 12 16 (25)
Gross deposits (on and off balance)
Fixed annuities 1,628 306 N.M.
Variable annuities 714 685 4
Saving products 580 648 (10)
Retail mutual funds 642 564 14
Pensions and asset management 2,829 3,183 (11)
Institutional guaranteed products 1,848 3,249 (43)
Life reinsurance 0 1 N.M.
Total gross deposits 8,241 8,636 (5)
Total gross deposits excl. institutional
guaranteed products 6,393 5,387 19
Net deposits (on and off balance)
by line of business
Fixed annuities 688 (795) N.M.
Variable annuities 78 (152) N.M.
Saving deposits (67) (72) 7
Retail mutual funds (98) 171 N.M.
Pensions and asset management 506 1,170 (57)
Institutional guaranteed products (2,354) (1,195) (97)
Life reinsurance (16) (15) (7)
Total net deposits (1,263) (888) (42)
Total net deposits excl. institutional
guaranteed products 1,091 307 N.M.
EMPLOYEE NUMBERS At At
Mar. Dec.
31 31
2009 2008
Number of employees 31,156 31,425
VALUE OF NEW BUSINESS AND IRR
VNB VNB
EUR EUR
Notes Q1 Q1
EUR millions, after tax 2009 2008 %
Americas 79 79 0
The Netherlands 31 12 158
United Kingdom 57 53 8
Asia 2 5 (60)
Central and Eastern Europe 12 23 (48)
Other European Countries 26 14 86
VA Europe (7) 0 N.M.
Total 201 186 8
IRR % IRR%
Americas 10.3 12.6
The Netherlands 14.1 10.7
United Kingdom 15.0 13.0
Asia 9.6 17.0
Central and Eastern Europe 34.4 39.0
Other European Countries 48.8 43.2
VA Europe (3.8) -
Total 17.8 18.4
MODELED NEW BUSINESS, Premium
APE AND DEPOSITS business
APE
Notes Q1 Q1
EUR millions 2009 2008 %
11
Americas 266 295 (10)
The Netherlands 78 73 7
United Kingdom 312 378 (17)
Asia 13 17 (24)
Central and Eastern Europe 17 25 (32)
Other European Countries 84 59 42
Total 769 847 (9)
Deposit
business
Deposits
Americas 5,252 5,997 (12)
Asia 3 7 (57)
Central and Eastern Europe 22 17 29
Other European Countries 0 6 N.M.
VA Europe 111 0 N.M.
Total 5,389 6,026 (11)
Premium
business
VNB/PVNBP SUMMARY VNB PVNBP VNB/ VNB/
PVNBP APE
Notes Q1
EUR millions 2009 % %
12
Americas 31 1,230 2.6 11.8
The Netherlands 31 647 4.8 39.6
United Kingdom 57 2,024 2.8 18.3
Asia 2 76 2.2 12.7
Central and Eastern Europe 7 102 6.6 39.8
Other European Countries 26 753 3.5 31.3
Total 154 4,832 3.2 20.0
Deposit
business
VNB PVNBP VNB/ VNB/
PVNBP Deposits
12
Americas 47 6,386 0.7 0.9
Asia 1 13 5.2 21.7
Central and Eastern Europe 6 195 2.9 25.5
VA Europe (7) 111 (5.9) (5.9)
Total 47 6,705 0.7 0.9
Notes:
1) Certain assets held by AEGON Americas, AEGON The Netherlands and AEGON UK are carried at fair value, and managed on a total return basis, with no offsetting changes in the valuation of related liabilities. These include assets such as hedge funds, private equities, real estate limited partnerships, convertible bonds and structured products. Underlying earnings exclude any over- or underperformance compared to management's long-term expected return on these assets. Based on current holdings and asset class returns, the long-term expected return on an annual basis is 8-10%, depending on the asset class, including cash income and market value changes. The expected earnings from these assets classes are net of DPAC where applicable. In addition, certain products offered by AEGON Americas contain guarantees and are reported on a fair value basis, including the segregated funds offered by AEGON Canada and the total return annuities and guarantees on variable annuities of AEGON USA. The earnings on these products are impacted by movements in equity markets and risk free interest rates. Short-term developments in the financial markets may therefore cause volatility in earnings. Included in underlying earnings is a long-term expected return on these products and any over- or underperformance compared to management's expected return is excluded from underlying earnings. The fair value movements of certain guarantees and the fair value change of derivatives that hedge certain risks on these guarantees of AEGON the Netherlands and Variable Annuities Europe (included in Other countries) are excluded from underlying earnings.
The Holding includes certain issued bonds that are held at fair value
through profit or loss. The interest rate risk on these bonds is hedged using
swaps. The change in AEGON's credit spread resulted in a gain of
2) Net income refers to net income attributable to equity holders of AEGON N.V.
3) New life sales is defined as new recurring premiums + 1/10 of single premiums.
4) Deposits on and off balance sheet.
5) Return on equity is calculated by dividing the net underlying earnings after cost of leverage by the average shareholders' equity excluding the preferred shares and the revaluation reserve.
6) In order to maintain consistency in definitions, starting in the
fourth quarter 2008, the net impact of the fair value movements of guarantees
and the related hedges in
7) Capital securities that are denominated in foreign currencies are, for purposes of calculating the capital base ratio, revalued to the period- end exchange rate.
8) All ratios exclude AEGON's revaluation reserve. Included in other non-operating income/(charges) are charges made to
9) policyholders with respect to income tax. There is an equal and opposite tax charge which is reported in the line Income tax attributable to policyholder return. Includes production on investment contracts without a discretionary
10) participation feature of which the proceeds are not recognized as revenues but are directly added to our investment contract liabilities.
11) APE = recurring premium + 1/10 single premium.
12) PVNBP: Present Value New Business Premium.
CONDENSED CONSOLIDATED BALANCE SHEET
At Mar. At Dec.
31 31
2009 2008 %
EUR millions
Investments general account 133,130 130,481 2
Investments for account of policyholders 103,312 105,400 (2)
Investments in associates 584 595 (2)
Deferred expenses and rebates 13,104 12,794 2
Other assets and receivables 26,618 27,766 (4)
Cash and cash equivalents 6,274 10,223 (39)
Total assets 283,022 287,259 (1)
Shareholders' equity 4,899 6,055 (19)
Convertible core capital securities 3,000 3,000 0
Other equity instruments 4,700 4,699 0
Minority interest 7 6 17
Group equity 12,606 13,760 (8)
Insurance contracts general account 101,575 97,377 4
Insurance contracts for account of
policyholders 59,635 60,808 (2)
Investment contracts general account 35,390 36,231 (2)
Investment contracts for account of
policyholders 44,386 45,614 (3)
Other liabilities 29,430 33,469 (12)
Total equity and liabilities 283,022 287,259 (1)
CAPITAL BASE
Group equity 12,606 # 13,760 (8)
Trust pass-through securities 154 161 (4)
Subordinated borrowings 8 41 (80)
Senior debt related to insurance
activities 328 69 N.M.
Total capital base 13,096 14,031 (7)
CONDENSED CONSOLIDATED INCOME STATEMENT
Q1 Q1
EUR millions (except per share data) Notes 2009 2008 %
Premium income 5,990 6,315 (5)
Investment income 2,250 2,422 (7)
Fee and commission income 400 434 (8)
Other revenues 1 1 0
Total revenues 8,641 9,172 (6)
Income from reinsurance ceded 461 335 38
Results from financial transactions (7,254) (8,900) 18
Other income 2 0 N.M.
Total income 1,850 607 N.M.
Benefits and expenses 1,756 270 N.M.
Impairment charges 430 34 N.M.
Interest charges and related fees 120 95 26
Other charges 1 0 N.M.
Total charges 2,307 399 N.M.
Share in net results of associates 2 9 (78)
Income before tax (455) 217 N.M.
Income tax 282 (64) N.M.
Net income attributable to equity
holders of AEGON N.V. (173) 153 N.M.
Net income per common share
Basic earnings per share (0.15) 0.07 N.M.
Dilluted earnings per share (0.15) 0.07 N.M.
CONDENSED CONSOLIDATED
STATEMENT OF COMPREHENSIVE At Mar. At Mar. At Dec.
INCOME 31 31 31
2009 2008 2008
EUR millions
Net income (173) 153 (1,082)
Other comprehensive income:
Movements in foreign currency translations
reserve 455 (1,066) (170)
Movements in revaluation reserves (1,373) (1,510) (6,651)
Other comprehensive income for the period (918) (2,576) (6,821)
Total comprehensive income attributable to
shareholders of AEGON N.V. (1,091) (2,423) (7,903)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Shareholders' equity at January 1 6,055 15,151 15,151
Total comprehensive income attributable to
shareholders of AEGON N.V. (1,091) (2,423) (7,903)
Dividends paid on ordinary shares 0 0 (548)
Preferred dividend 0 0 (112)
Repurchased and sold own shares 4 (73) (217)
Coupons on perpetuals (net of tax) (48) (46) (189)
Coupons on convertible core capital securities 0 0 (121)
Other changes (21) (12) (6)
Shareholders' equity at end of period 4,899 12,597 6,055
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Q1 Q1
EUR millions Notes 2009 2008 %
Cash flow from operating activities (4,127) 1,615 N.M.
Cash flow from investing activities
Purchase and disposal of intangible assets (1) (1) 0
Purchase and disposal of equipment
and other assets (15) (11) (36)
Purchase, disposal and dividends of
subsidiaries and associates (8) (6) (33)
(24) (18) (33)
Cash flow from financing activities
Issuance and purchase of share
capital 4 (73) N.M.
Issuance, repayment and coupons
of perpetuals (64) (62) (3)
Issuance, repayment and finance
interest on borrowings 628 810 (22)
568 675 (16)
Net increase/(decrease) in cash
and cash equivalents (3,583) 2,272 N.M.
AMOUNTS PER COMMON SHARE
Q1 Q1
Notes 2009 2008 %
Net income in EUR 1 (0.15) 0.07 N.M.
Net income fully diluted in EUR 1 (0.15) 0.07 N.M.
Net income in USD (0.20) 0.10 N.M.
Net income fully diluted in USD (0.20) 0.10 N.M.
Net underlying earnings in EUR 1 (0.04) 0.30 N.M.
Net underlying earnings fully
diluted in EUR 1 (0.04) 0.30 N.M.
Net underlying earnings in USD (0.05) 0.45 N.M.
Net underlying earnings fully
diluted in USD (0.05) 0.45 N.M.
Net operating earnings in EUR 1 (0.14) 0.09 N.M.
Net operating earnings fully
diluted in EUR 1 (0.14) 0.09 N.M.
Net operating earnings in USD (0.18) 0.13 N.M.
Net operating earnings fully
diluted in USD (0.18) 0.13 N.M.
At At
Mar. 31 Dec. 31
2009 2008
Shareholders' equity in EUR 2 1.84 2.60 (29)
Shareholders' equity in USD 2 2.45 3.62 (32)
NET INCOME PER COMMON SHARE CALCULATION
Q1 Q1
EUR millions (except per share data) Notes 2009 2008 %
Net income (173) 153 N.M.
Coupons on perpetuals (48) (46) (4)
Net income / (loss) attributable to
ordinary shareholders (221) 107 N.M.
Weighted average number of common
shares outstanding 1,516 1,499 1
Net income per share (0.15) 0.07 N.M.
Quarterly net income per common share
first quarter (0.15) 0.07 N.M.
second quarter 0.08
third quarter (0.25)
fourth quarter (0.82)
SEGMENT REPORTING (quarter- to-date information)
The United
Americas Netherlands Kingdom
Q1 Q1 Q1 Q1 Q1 Q1
EUR millions 2009 2008 2009 2008 2009 2008
Underlying earnings
before tax
geographically for
reportable segments (60) 499 76 130 7 45
Inter-segment
elimination (8) (21) (4) (17) 0 0
Underlying
earnings before
tax
geographically
for reportable
segments (68) 478 72 113 7 45
Over/(under)
performance of
fair value items (32) (374) (190) (154) (3) 0
Total operating
earnings before
tax (100) 104 (118) (41) 4 45
Gains/(losses)
on investments 28 (47) 110 76 10 3
Impairment
charges (286) (19) (78) (17) (14) 0
Impairment
reversals 2 5 0 0 0 0
Other income/
(charges) 1 0 0 0 (24) (54)
Income before
tax (355) 43 (86) 18 (24) (6)
Income tax 222 (69) 45 1 30 47
Net income (133) (26) (41) 19 6 41
Revenues
Life insurance
gross premiums 1,499 1,474 1,568 1,458 1,820 2,258
Accident and
health insurance 453 422 106 118 0 0
General insurance 0 0 138 134 0 0
Total gross
premiums 1,952 1,896 1,812 1,710 1,820 2,258
Investment
income 1,142 1,202 502 547 517 596
Fee and commission
income 222 242 106 111 44 60
Other revenues 0 1 0 0 0 0
Total revenues
for reportable
segments 3,316 3,341 2,420 2,368 2,381 2,914
Inter-segment
elimination 0 (1) (1) 1 (1) 0
Total revenues 3,316 3,340 2,419 2,369 2,380 2,914
- Table Continued -
SEGMENT REPORTING (quarter- to-date information)
Holding
Other and other
countries activities Total
Q1 Q1 Q1 Q1 Q1 Q1
EUR millions 2009 2008 2009 2008 2009 2008
Underlying earnings
before tax
geographically for
reportable segments 32 40 (77) (56) (22) 658
Inter-segment
elimination (2) (1) 14 39 0 0
Underlying
earnings before
tax
geographically
for reportable
segments 30 39 (63) (17) (22) 658
Over/(under)
performance of
fair value items 1 0 27 87 (197) (441)
Total operating
earnings before
tax 31 39 (36) 70 (219) 217
Gains/(losses)
on investments 4 0 21 54 173 86
Impairment
charges (5) (1) (5) 0 (388) (37)
Impairment
reversals 0 0 0 0 2 5
Other income/
(charges) 0 0 0 0 (23) (54)
Income before
tax 30 38 (20) 124 (455) 217
Income tax (21) (10) 6 (33) 282 (64)
Net income 9 28 (14) 91 (173) 153
Revenues
Life insurance
gross premiums 340 383 0 0 5,227 5,573
Accident and
health insurance 29 29 0 0 588 569
General insurance 37 39 0 0 175 173
Total gross
premiums 406 451 0 0 5,990 6,315
Investment
income 77 61 70 60 2,308 2,466
Fee and
commission
income 28 21 0 0 400 434
Other revenues 1 0 0 0 1 1
Total revenues
for reportable
segments 512 533 70 60 8,699 9,216
Inter-segment
elimination 0 0 (56) (44) (58) (44)
Total revenues 512 533 14 16 8,641 9,172
Amounts in million EUR (unless otherwise stated)
INVESTMENTS GEOGRAPHICALLY
United
Americas Kingdom The
USD GBP At March 31, 2009 Americas Netherlands
Investments
1,412 36 Shares 1,061 785
77,611 5,111 Bonds 58,319 18,195
18,910 10 Loans 14,209 11,734
19,322 0 Other financial assets 14,519 117
679 0 Investments in real estate 510 2,044
Investments general
117,934 5,157 account 88,618 32,875
0 16,114 Shares 0 5,450
0 11,950 Bonds 0 12,896
Separate accounts and
55,791 2,327 investment funds 41,923 0
0 5,825 Other financial assets 0 1,011
0 972 Investments in real estate 0 0
Investments for account of
55,791 37,188 policyholders 41,923 19,357
Investments on balance
173,725 42,345 sheet 130,541 52,232
Off balance sheet
investments
105,674 1,863 third parties 79,407 11,195
Total revenue generating
279,399 44,208 investments 209,948 63,427
Investments
92,655 5,055 Available-for-sale 69,623 18,783
18,910 10 Loans 14,209 11,734
0 0 Held-to-maturity 0 0
Financial assets at
fair value through
61,481 36,308 profit or loss 46,199 19,671
679 972 Investments in real estate 510 2,044
Total investments
on balance
173,725 42,345 sheet 130,541 52,232
Elimination of treasury
(2) 0 shares * (2) (5)
Investments in
24 13 associates 18 60
35,144 6,723 Other assets 26,408 7,651
Consolidated
208,891 49,081 total Assets 156,965 59,938
- Table Continued -
Holding &
United Other other Total
At March 31, 2009 Kingdom countries activities Eliminations EUR
Investments
Shares 39 161 47
Bonds 5,491 4,672 21 0 86,698
Loans 11 1,077 0 0 27,031
Other financial
Assets 0 120 0 0 14,756
Investments in real
estate 0 0 0 0 2,554
Investments general
account 5,541 6,030 68 (2) 133,130
Shares 17,312 344 0 (5) 23,101
Bonds 12,838 278 0 0 26,012
Separate accounts
And investment funds 2,500 1,251 0 0 45,674
Other financial assets 6,258 212 0 0 7,481
Investments in
real estate 1,044 0 0 0 1,044
Investments for
account of
policyholders 39,952 2,085 0 (5) 103,312
Investments on balance
sheet 45,493 8,115 68 (7) 236,442
Off balance sheet
Investments
third parties 2,001 5,235 0 0 97,838
Total revenue
Generating
investments 47,494 13,350 68 (7) 334,280
Investments
Available-for-sale 5,431 2,447 68 0 96,352
Loans 11 1,077 0 0 27,031
Held-to-maturity 0 2,278 0 0 2,278
Financial assets at
fair value through
profit or loss 39,007 2,313 0 (7) 107,183
Investments in real
estate 1,044 0 0 0 3,598
Total investments
on balance sheet 45,493 8,115 68 (7) 236,442
Elimination of treasury
shares * 0 0 0 7 0
Investments in
associates 13 490 5 (2) 584
Other assets 7,224 1,728 14,870 (11,494) 46,387
Consolidated
total Assets 52,730 10,333 14,943 (11,496) 283,413
* Due to the split by country unit on this line, it is necessary to
reverse the elimination of treasury shares in the column eliminations,
as elimination by type had already taken place in the column
eliminations above as well.
Amounts in million EUR (unless otherwise stated)
INVESTMENTS GEOGRAPHICALLY
United
Americas Kingdom The
USD GBP At December 31, 2008 Americas Netherlands
Investments
1,436 39 Shares 1,031 1,297
83,846 4,915 Bonds 60,247 18,298
19,194 10 Loans 13,792 10,416
15,635 0 Other financial assets 11,235 112
679 0 Investments in real estate 488 2,040
Investments general
120,790 4,964 account 86,793 32,163
0 17,360 Shares 0 6,416
0 12,675 Bonds 0 11,675
Separate accounts and
58,943 2,381 investment funds 42,353 0
0 6,376 Other financial assets 0 1,042
0 1,077 Investments in real estate 0 0
Investments for account
58,943 39,869 of policyholders 42,353 19,133
Investments on balance
179,733 44,833 sheet 129,146 51,296
Off balance sheet
investments
106,434 2,289 third parties 76,478 11,783
Total revenue generating
286,167 47,122 investments 205,624 63,079
Investments
94,444 4,859 Available-for-sale 67,862 19,110
19,194 10 Loans 13,792 10,416
0 0 Held-to-maturity 0 0
Financial assets at
fair value through
65,416 38,887 profit or loss 47,004 19,730
679 1,077 Investments in real estate 488 2,040
Total investments on
179,733 44,833 balance sheet 129,146 51,296
Elimination of treasury
(3) 0 shares * (2) (9)
Investments in
30 13 associates 21 55
36,798 7,192 Other assets 26,442 12,469
Consolidated
216,558 52,038 total Assets 155,607 63,811
- Table Continued -
Holding &
United Other other Total
Kingdom countries activities Eliminations EUR
Investments
Shares 41 183 52 (2) 2,602
Bonds 5,161 4,827 20 0 88,553
Loans 10 1,116 0 0 25,334
Other financial
assets 0 117 0 0 11,464
Investments in
real estate 0 0 0 0 2,528
Investments general
account 5,212 6,243 72 (2) 130,481
Shares 18,225 167 0 (9) 24,799
Bonds 13,307 330 0 0 25,312
Separate accounts
and investment
funds 2,500 1,420 0 0 46,273
Other financial
assets 6,693 150 0 0 7,885
Investments in
real estate 1,131 0 0 0 1,131
Investments for
account
of policyholders 41,856 2,067 0 (9) 105,400
Investments on
Balance sheet 47,068 8,310 72 (11) 235,881
Off balance sheet
investments
third parties 2,403 5,299 0 0 95,963
Total revenue
generating
investments 49,471 13,609 72 (11) 331,844
Investments
Available-for
-sale 5,101 2,602 72 0 94,747
Loans 10 1,116 0 0 25,334
Held-to-maturity 0 2,269 0 0 2,269
Financial assets at
fair value through
profit or loss 40,826 2,323 0 (11) 109,872
Investments in
real estate 1,131 0 0 0 3,659
Total investments
On balance
sheet 47,068 8,310 72 (11) 235,881
Elimination of
treasury
shares * 0 0 0 11 0
Investments in
associates 13 503 4 (2) 594
Other assets 7,552 1,660 17,395 (14,734) 50,784
Consolidated
total Assets 54,633 10,473 17,471 (14,736) 287,259
* Due to the split by country unit on this line, it is necessary to
reverse the elimination of treasury shares in the column eliminations,
as elimination by type had already taken place in the column
eliminations above as well.
ASSETS AND CAPITAL GEOGRAPHICALLY
amounts in million EUR (unless otherwise stated)
United
Americas Kingdom The
USD GBP Americas Netherlands
At March 31, 2009
208,891 49,081 Assets business units 156,965 59,938
Other assets
Total assets on
balance sheet
10,228 1,132 Capital in units 7,686 2,351
Total capital base
Other net liabilities
Total
At December 31, 2008
216,558 52,038 Assets business units 155,607 63,811
Other assets
Total assets on
balance sheet
10,617 1,257 Capital in units 7,629 2,954
Total capital base
Other net liabilities
Total
- Table Continued -
United Other Total
Kingdom countries EUR
At March 31, 2009
Assets business units 52,730 10,333 279,966
Other assets 3,056
Total assets on
balance sheet 283,022
Capital in units 1,216 1,802 13,055
Total capital base 13,096
Other net liabilities (41)
Total 13,055
At December 31, 2008
Assets business units 54,633 10,473 284,524
Other assets 2,735
Total assets on
balance sheet 287,259
Capital in units 1,320 1,948 13,851
Total capital base 14,031
Other net liabilities (180)
Total 13,851
Currencies
Income statement items: average rate 1 EUR = USD 1.3023 (2008: USD
1.4989).
Income statement items: average rate 1 EUR = GBP 0.9070 (2008: GBP
0.7569).
Balance sheet items: closing rate 1 EUR = USD 1.3308 (2008: USD 1.5812;
year-end 2008: USD 1.3917).
Balance sheet items: closing rate 1 EUR = GBP 0.9308 (2008: GBP 0.7958;
year-end 2008: GBP 0.9525).
Notes:
1) After deduction of preferred dividend and coupons on perpetuals.
Shareholders' equity per share is calculated after deduction of the
preferred share
2) capital of EUR 2.1 billion (at Dec. 31, 2008:
EUR 2.1 billion) and considering the number of treasury shares. The
number of common shares used in the calculation of shareholders'
equity per share is 1,516 million (at Dec. 31, 2008: 1,515 million).
Basis of preparation and significant accounting policies
The condensed consolidated interim financial statements as at and for the
3 month period ended
The condensed consolidated interim financial statements included in Appendix III have been prepared in accordance with the historical cost convention as modified by the revaluation of investment properties and those financial instruments (including derivatives) and financial liabilities that have been measured at fair value.
The published figures in these condensed consolidated interim financial statements are unaudited.
All accounting policies and methods of computation applied in the condensed consolidated interim financial statements are the same as those applied in the 2008 consolidated financial statements, which were prepared in accordance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and adopted by the European Union, except for the changes highlighted below.
The following new standards and amendments to standards are mandatory for
the first time for the financial year beginning
IFRS 8 'Operating segments'. This standard requires disclosure of information about the Group's operating segments and replaces the requirement to determine primary (geographical) and secondary (business) reporting segments of the Group.
Under IFRS 8, AEGON's operating segments are based on the businesses as presented in internal reports that are regularly reviewed by the executive board which is regarded as the "chief executive decision maker". The operating segments are:
- AEGON Americas. Main business lines include life and protection,
individual savings and retirement, pensions and asset management,
institutional products and life reinsurance.
- AEGON The Netherlands. Main business lines include life and protection,
individual savings and retirement, pensions and asset management,
distribution and general insurance.
- AEGON United Kingdom. Main business lines include life and protection,
pensions and asset management and distribution.
- Other countries. Other countries include the country units Central and
Eastern Europe, other European countries, European variable annuities
and Asia. Main business lines include life and protection, pensions and
asset management and general insurance.
- Holding and other activities. Includes finance, employee and other
administrative expenses of the group staff functions.
This report includes a non-IFRS financial measure: Underlying earnings before tax. AEGON believes this non-IFRS measure, together with the IFRS measure (Net income), provides a meaningful measure for the investing public to evaluate AEGON's business relative to the businesses of our peers. In addition, underlying earnings is a key performance indicator on which the executive board manages AEGON's performance. The reconciliation of this measure to the most comparable IFRS measure is shown in table Segment reporting on page 34.
The adoption of IFRS 8 did not have any impact on equity or net income. In accordance with the transitional requirements of the standard, AEGON has provided full comparative information.
IAS 1 (revised) 'Presentation of financial statements'. The revised standard separates owner and non-owner changes in equity. The statement of changes in equity includes only details of transactions with owners, with non- owner changes in equity presented as a single line. In addition, the standard introduces the statement of comprehensive income: it presents all items of recognized income and expenses, either in one single statement, or in two linked statements. AEGON has elected to present two statements. The adoption of this standard did not have any impact on equity or net income. In accordance with the transitional requirements of the standard, AEGON has provided full comparative information.
IFRS 2 'Share-based Payment - Vesting Conditions and Cancellations'. The Standard has been amended to clarify the definition of vesting conditions and to prescribe the accounting treatment of an award that is effectively cancelled because a non-vesting condition is not satisfied. The adoption of this amendment did not have any impact on the financial position or performance of the Group.
IAS 23 'Borrowing Costs (revised)'.
The standard has been revised to require capitalization of borrowing costs on qualifying assets. This amendment is not relevant to the Group as the Group already has a policy to capitalize borrowing costs.
In addition, the following new standards, amendments to existing standards
and interpretations are mandatory for the first time for the financial year
beginning
- IFRIC 16 'Hedges of a net investment in a foreign operation';
- Amendments to IAS 39 'Eligible hedged items';
- Improvements to IFRS (2008).
Condensed consolidated income statement
The result from financial transactions in Q1 2009 amounted to a loss of
Capital and funding
The capital management section, on page 2 provides information on issuances, repurchases and repayments of debt and equity securities during the current interim reporting period.
Investment impairments
Page 6 of the results release includes information on net impairments recognized in Q1 of 2009.
Fair value measurement
Fair value measurement of financial assets and liabilities has been
subject of industry-wide discussions between preparers, regulators and users
of financial statements. The distressed markets continuing since the second
half of 2008 resulted in challenges related to the fair value measurement of
financial instruments because of far less liquidity in the market, forced
sales resulting from deleveraging activities and asset/liability programs.
Assets with a mark-to-model valuation are now 3.8% (
Business combinations
There were no significant new business combinations during Q1 2009.
Commitments and contingencies
There have been no material changes in contingent assets and liabilities reported in the 2008 consolidated financial statements of AEGON.
Events after the balance sheet date
On
On
As an international life insurance, pension and investment company based
in
Key figures First quarter Full year 2008
2009
Underlying earnings before tax EUR (22) million EUR 1.57 billion
New life sales EUR 543 million EUR 2.63 billion
Gross deposits EUR 8.2 billion EUR 40.75 billion
Revenue generating investments
(End of period) EUR 334 billion EUR 332 billion
Disclaimers
Cautionary note regarding non-GAAP measures
This press release includes certain non-GAAP financial measures: (net) underlying earnings, net operating earnings, operating earnings before tax and value of new business. The reconciliation of net underlying earnings and underlying earnings before tax to the most comparable IFRS measures is provided on page 34. A reconciliation of (net) underlying earnings to operating earnings before tax is provided on page 27.
Value of new business is not based on IFRS, which are used to report AEGON's quarterly condensed consolidated interim financial statements and should not be viewed as a substitute for IFRS financial measures.
AEGON believes that these non-GAAP measures, together with the IFRS information, provide a meaningful measure for the investment community to evaluate AEGON's business relative to the businesses of our peers.
Local currencies and constant currency exchange rates
This press release contains certain information about our results and
financial condition in USD for the Americas and GBP for the
Forward-looking statements
The statements contained in this press release that are not historical facts are forward-looking statements as defined in the US Private Securities Litigation Reform Act of 1995. The following are words that identify such forward-looking statements: believe, estimate, target, intend, may, expect, anticipate, predict, project, counting on, plan, continue, want, forecast, should, would, is confident, will, and similar expressions as they relate to our company. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. We undertake no obligation to publicly update or revise any forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which merely reflect company expectations at the time of writing. Actual results may differ materially from expectations conveyed in forward-looking statements due to changes caused by various risks and uncertainties. Such risks and uncertainties include but are not limited to the following:
- Changes in general economic conditions, particularly in the United
States, the Netherlands and the United Kingdom;
- Changes in the performance of financial markets, including emerging
markets, such as with regard to:
- The frequency and severity of defaults by issuers in our fixed income
investment portfolios; and
- The effects of corporate bankruptcies and/or accounting restatements on
the financial markets and the resulting decline in the value of equity
and debt securities we hold;
- The frequency and severity of insured loss events;
- Changes affecting mortality, morbidity and other factors that may
impact the profitability of our insurance products;
- Changes affecting interest rate levels and continuing low or rapidly
changing interest rate levels;
- Changes affecting currency exchange rates, in particular the EUR/USD
and EUR/GBP exchange rates;
- Increasing levels of competition in the United States, the Netherlands,
the United Kingdom and emerging markets;
- Changes in laws and regulations, particularly those affecting our
operations, the products we sell, and the attractiveness of certain
products to our consumers;
- Regulatory changes relating to the insurance industry in the
jurisdictions in which we operate;
- Acts of God, acts of terrorism, acts of war and pandemics;
- Changes in the policies of central banks and/or governments;
- Litigation or regulatory action that could require us to pay
significant damages or change the way we do business;
- Customer responsiveness to both new products and distribution channels;
- Competitive, legal, regulatory, or tax changes that affect the
distribution cost of or demand for our products;
- Our failure to achieve anticipated levels of earnings or operational
efficiencies as well as other cost saving initiatives; and
- The impact our adoption of the International Financial Reporting
Standards may have on our reported financial results and financial
condition.
Further details of potential risks and uncertainties affecting the company are described in the company's filings with Euronext Amsterdam and the US Securities and Exchange Commission, including the Annual Report on Form 20-F. These forward-looking statements speak only as of the date of this document. Except as required by any applicable law or regulation, the company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any
change in the company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
Group Corporate Communications & Investor Relations
Media relations:
Phone: +31(0)70-344-8956
E-mail: ir@aegon.com' target='_blank' title='gcc-ir@aegon.com'>gcc-ir@aegon.com
Media conference call
8:00 am CET
Audio webcast on http://www.aegon.com
Investor relations:
Phone: +31(0)70-344-8305
or +1-877-548-9668 - toll free USA only
E-mail: ir@aegon.com
Analyst & investor call
3:00 pm CET
Audio webcast on http://www.aegon.com
Call-in numbers (listen only):
Netherlands +31-20-796-5332
United Kingdom +44-208-515-2316
United States +1-480-293-1744
Website: http://www.aegon.com
Financial supplement:
AEGON's Q1 2009 Financial supplement is available on http://www.aegon.com.
Video interview Alex Wynaendts
Available on www.aegon.com at
SOURCE AEGON N.V.