Aegon Reports Net Income of EUR 478 Million in the Fourth Quarter of 2015
THE HAGUE, the Netherlands, February 19, 2016 /PRNewswire/ --
- Underlying earnings before tax amount to EUR 486 million
- Underlying earnings impacted by lower earnings in US
- Net income increases to EUR 478 million, driven by net recoveries and lower fair value losses
- Return on equity of 8.3%
- Record sales driven by fee-based deposit businesses
- Strong growth in asset management drives gross deposits up 63% to EUR 22.3 billion; net deposits increase to EUR 2.8 billion
- New life insurance sales decline 16% to EUR 440 million driven by all markets
- Accident & health and general insurance sales up 5% to EUR 238 million
- Market consistent value of new business of EUR 149 million impacted by low interest rates
- Returning capital to shareholders
- Operational free cash flows excluding market impacts and one-time items of EUR 377 million
- Holding excess capital of EUR 1.4 billion and a gross leverage ratio of 27.0%
- Solvency II ratio per year-end 2015 at ~160% and final 2015 dividend increase to EUR 0.13 reaffirmed
- EUR 400 million share buyback program on track - repurchased EUR 101 million since program start
Statement of Alex Wynaendts, CEO
"Aegon's fourth quarter results close a year in which we achieved record sales and accomplished many of our strategic objectives, although expectations for underlying earnings were not met in all of our businesses. The strong growth in revenue-generating assets this quarter, which now exceed 700 billion euros for the first time, reflects our focus to further expand our fee businesses.
"I am proud of the excellent work our dedicated employees do for Aegon's 30 million customers worldwide. In order to get even closer to our customers, and become a more agile and efficient organization, we are accelerating our digital transformation. One of our key financial ambitions is to reduce costs, and we are well on track to realize savings - particularly in the US.
"The recent market volatility, fuelled by uncertainty about economic growth, once again demonstrates the challenging environment in which we operate. I'm pleased that our strong capital position enables us to return capital to shareholders through an increased final dividend and a share buyback program.
"Looking ahead, by successfully executing on our strategy we will be able to deliver on our purpose and help many more people achieve a lifetime of financial security, in addition to generating long-term value for all our stakeholders."
Key performance indicators
amounts in EUR
millions b) Notes Q4 2015 Q3 2015 % Q4 2014 % FY 2015 FY 2014 %
Underlying earnings
before tax 1 486 436 11 562 (14) 1,939 1,865 4
Net income / (loss) 478 (524) - 399 20 619 1,186 (48)
Sales 2 2,913 2,604 12 2,117 38 10,708 8,602 24
Market consistent value of
new business 3 149 125 19 196 (24) 597 832 (28)
Return on equity 4 8.3% 6.8% 22 9.7% (14) 7.5% 7.8% (4)
STRATEGIC HIGHLIGHTS
- Strategy update and financial targets for 2018 presented at recent investor day
- Dutch commercial line non-life business sold to Allianz
- Center of Excellence for Digital launched to share expertise across the organization
- Aegon N.V. and Aegon Bank N.V. announce that the Netherlands is their Home Member State for purposes of the EU Transparency Directive
Strategy update
In January, Aegon provided the market with a strategy update and 2018 financial targets at its Analyst & Investor Conference in London, which included the announcement of a number of significant measures to improve operational performance. The company is targeting a group return on equity of 10% by 2018, which is supported by:
- Reducing annual operating expenses by EUR 200 million by the end of 2018
- Additional investments in digital capabilities and expertise of EUR 50 million per annum above the current level to further support the organic growth of the business
Aegon's solid capital position and free cash flow generation provide the foundation to accelerate capital returns to shareholders. The main announcements on Aegon's ambitions for capital and cashflow for the 2016-2018 period were:
- Group Solvency II ratio as of December 31, 2015, of ~160%
- Regulatory approval received to use the partial internal model to calculate Solvency II capital
- Cumulative free cash flows after holding expenses of EUR 3.3 billion until 2018. Dutch and UK operations expected to resume dividend payments in 2016 and 2017 respectively
- Capital returns to shareholders of over EUR 2 billion in the period 2016-2018
- Dividend pay-out ratio of 50% of free cash flows
- EUR 400 million share buyback
- Proposal to increase the 2015 final dividend per share to EUR 0.13, bringing the total 2015 dividend per share to EUR 0.25, a 9% increase over the 2014 dividend
Aegon's ambition is to be a trusted partner for financial solutions at every stage of life, and to be recognized by its customers, business partners and society as a company that puts the interests of its customers first in everything it does. In addition, Aegon wants to be regarded by its employees as an employer of choice, engaging and enabling them to succeed. This ambition is supported by four strategic objectives embedded in all Aegon businesses: Optimized portfolio, Operational excellence, Customer loyalty, and Empowered employees.
Optimized portfolio
In January, Aegon announced the sale to Allianz of its Dutch commercial line non-life business, which includes its proxy and co-insurance run-off portfolios. The transaction is expected to close in the third quarter of 2016, and follows the announcement last year that these activities are no longer strategically core to the company's non-life business. Aegon will continue to invest in income protection and retail non-life insurance.
Transamerica completed the acquisition of Mercer's US defined contribution (DC) record-keeping business on December 31, 2015. In addition, as part of an ongoing partnership with Mercer, Transamerica is now the preferred DC administration provider for Mercer's total benefit and total retirement outsourcing offerings. Transamerica has become a top 10 defined contribution plan provider, helping 4.7 million participants save and invest for their retirement.
On December 7, 2015, Aegon increased its stake in its Indian joint venture Aegon Life, a leader in the online life insurance market in India, from 26% to 49%. This follows last year's revision to India's insurance laws that enables foreign companies to own up to 49% of an Indian insurance company. Aegon Life's innovative internet platform provides customers with a convenient and valuable option to research, review and purchase online protection and savings products.
On February 16, Aegon signed an agreement with the Czech online comparison website Chytry Honza. In line with one of Aegon's strategic priorities to increase its digital capabilities and expertise, the business partnership will focus on digital services for customers who seek an independent comparison of insurance products. Aegon will leverage on Chytry Honza's online technological platform capabilities, multi-channel financial product distribution and digital know-how.
Operational excellence
In line with Aegon's strategy to increase operational efficiency, Aegon will insource the administration of its new Premie Pensioen Instelling (PPI) product in the Netherlands to its defined contribution administration subsidiary TKP. By using TKP's platform, Aegon will be able to offer its customers a higher level of service and the opportunity to use the latest technology, while at the same time also benefiting from TKP's scale. TKP is expected to administer the entire PPI portfolio by the end of 2016.
Customer loyalty
To help people achieve a lifetime of financial security and to meet the strong demand for guidance, Aegon has launched 'Aegon Assist' in the UK, a free information and guidance service. This service is for customers who do not have a financial adviser, but want information about their Aegon products. In the rapidly changing retirement landscape, where people are required to make decisions regarding options that did not exist just months ago, many people are unwilling to pay for financial advice. While Aegon will continue to recommend seeking advice, Aegon Assist can be an important additional option for customers to get the information they need to make the right decisions.
In January, Aegon launched a Center of Excellence for Digital in order to become more agile and more effective, leading to a higher level of service and a better customer experience. The center is dedicated to sharing best practices and delivering digital expertise across the business units in Asia, Central & Eastern Europe, the Netherlands and Spain & Portugal. The center will provide experts for digital projects that are being executed in the different regions. In addition, it will initiate projects that will be reusable in multiple country units and fill a common need.
Underlining Aegon's capabilities as a customer-centric organization, Aegon's online bank Knab, won the Opiness award for providing the 'best service' in the category 'banks'. Opiness is a widely-respected, independent review platform in the Netherlands, and its annual awards are presented to companies that provide an excellent level of customer service.
Empowered employees
In the US, Transamerica scored 90 out of 100 in the 2016 Corporate Equality Index (CEI) rating. The rating reinforces Aegon's commitment to workplace equality, an important benchmark for customers when deciding where to buy financial products, as well as another important step in becoming a preferred employer in the sector.
Results from Aegon's fifth annual global employee survey place Aegon above the industry norm for the financial services sector. Employee enablement has increased 1 point in 2015 and reached 75 points, which exceeds the industry norm as well as the high performing norm with 7 and 4 points respectively. Employee engagement shows a slight decrease to 71 points, which is still above the industry norm and up 8 points since the first survey in 2011. 82% of all Aegon employees worldwide participated in the survey. This demonstrates the success of Aegon's ongoing work to become the most preferred employer in the sector, which allows Aegon to attract and develop the talent required to best service the needs of its customers.
Responsible business
As part of Aegon's commitment to a sustainable future, Aegon Asset Management has invested EUR 45 million in a German offshore wind farm. This investment will help facilitate the transition to a low carbon economy and fits with Aegon's sustainability remit, while also promising an attractive risk/return over a relatively short period. Aegon Asset Management worked together with its French joint venture partner La Banque Postale Asset Management in the project, which invested a further EUR 25 million.
Financial overview
EUR millions Notes Q4 Q3 % Q4 % FY FY %
2015 2015 2014 2015 2014
Underlying earnings
before tax
Americas 310 243 28 367 (15) 1,200 1,134 6
The Netherlands 135 135 - 172 (21) 537 558 (4)
United Kingdom 26 27 (4) 29 (9) 125 115 9
New Markets 54 69 (23) 33 61 236 196 20
Holding and other (39) (38) (3) (39) (2) (161) (138) (17)
Underlying earnings
before tax 486 436 11 562 (14) 1,939 1,865 4
Fair value items (65) (103) 36 (132) 51 (620) (807) 23
Realized gains /
(losses) on investments 58 36 63 304 (81) 346 697 (50)
Net impairments 64 (12) - (28) - 49 (34) -
Other income /
(charges) (19) (950) 98 (191) 90 (980) (240) -
Run-off businesses 14 28 (50) (3) - 52 (21) -
Income before tax 537 (565) - 511 5 786 1,458 (46)
Income tax (60) 41 - (112) 47 (167) (272) 39
Net income / (loss) 478 (524) - 399 20 619 1,186 (48)
Net income / (loss)
attributable to:
Equity holders of
Aegon N.V. 477 (524) - 399 20 619 1,186 (48)
Non-controlling
interests - - 174 - (5) 1 1 58
Net underlying
earnings 420 355 18 429 (2) 1,552 1,416 10
Commissions and
expenses 1,818 1,510 20 1,596 14 6,802 5,892 15
of which operating
expenses 9 997 912 9 897 11 3,734 3,312 13
New life sales
Life single premiums 930 1,165 (20) 1,481 (37) 4,578 5,596 (18)
Life recurring premiums
annualized 347 319 9 374 (7) 1,486 1,485 -
Total recurring plus
1/10 single 440 435 1 523 (16) 1,944 2,045 (5)
New life sales
Americas 10 152 148 3 169 (10) 599 552 9
The Netherlands 43 24 77 82 (47) 130 251 (48)
United Kingdom 186 194 (4) 194 (4) 911 972 (6)
New Markets 10 59 68 (13) 76 (23) 304 271 12
Total recurring plus
1/10 single 440 435 1 523 (16) 1,944 2,045 (5)
New premium production
accident and health
insurance 213 212 1 205 4 960 942 2
New premium production
general insurance 25 18 39 21 17 84 72 17
Gross deposits (on and
off balance)
Americas 10 8,511 7,868 8 7,764 10 36,999 31,849 16
The Netherlands 1,459 1,000 46 989 48 5,137 2,781 85
United Kingdom 68 71 (3) 67 1 307 281 9
New Markets 10 12,311 10,455 18 4,864 153 34,761 20,519 69
Total gross deposits 22,350 19,394 15 13,684 63 77,205 55,431 39
Net deposits (on and
off balance)
Americas 10 726 711 2 (314) - 7,754 5,358 45
The Netherlands 504 230 119 484 4 1,885 1,131 67
United Kingdom 40 39 3 34 20 176 156 13
New Markets 10 1,767 3,564 (50) 591 199 8,581 3,296 160
Total net deposits
excluding run-off
businesses 3,038 4,544 (33) 794 - 18,396 9,941 85
Run-off businesses (215) (294) 27 (170) (27) (833) (1,217) 32
Total net deposits /
(outflows) 2,823 4,250 (34) 625 - 17,563 8,724 101
Revenue-generating investments
Dec. 31, Sep. 30, Dec. 31,
2015 2015 % 2014 %
Revenue-generating investments (total) 707,390 635,458 11 558,328 27
Investments general account 160,792 160,830 - 153,653 5
Investments for account of policyholders 200,226 193,562 3 191,467 5
Off balance sheet investments third parties 346,371 281,066 23 213,208 62
OPERATIONAL HIGHLIGHTS
Underlying earnings before tax
Aegon's underlying earnings before tax in the fourth quarter of 2015 declined to EUR 486 million. Favorable currency movements and the positive impact of growth in New Markets were more than offset by lower earnings in the other business units. This was mainly related to the reduction in recurring earnings resulting from the assumption changes and model updates implemented in the United States and Asia in the third quarter of 2015, lower earnings from fixed and variable annuities and retirement plans in the United States and adverse one-time items. One-time items had a negative impact of EUR 11 million and a positive impact of EUR 48 million in the fourth quarter of 2015 and 2014, respectively.
Underlying earnings from the Americas were down to EUR 310 million. The positive impact on earnings from the stronger US dollar was more than offset by the recurring impact of the actuarial assumption changes and model updates implemented in the third quarter of 2015, lower annuity and retirement plan earnings, adverse one-time items of EUR 22 million and the divestment of Canada.
In the Netherlands, underlying earnings declined to EUR 135 million, as the fourth quarter of 2014 included a reserve release related to a new employee pension arrangement of EUR 45 million. On a comparable basis, underlying earnings increased 7%, as lower funding costs and a mortality provision release more than offset lower non-life results.
Underlying earnings from Aegon's operations in the United Kingdom amounted to EUR 26 million. Favorable currency movements were more than offset by adverse market movements and lower investment income due to selective de-risking of the investment portfolio to improve the capital position under Solvency II.
Underlying earnings from New Markets were up 61% to EUR 54 million. This increase was the result of higher earnings in Central & Eastern Europe, Asia and Aegon Asset Management, which were partly offset by higher expenses in Variable Annuities Europe.
Total holding costs were stable at EUR 39 million, and included a currency gain of EUR 3 million.
Net income
Net income increased to EUR 478 million, as improved Other charges, an improved result on fair value items, higher recoveries and lower taxes more than offset a decline in underlying earnings before tax and lower realized gains.
Fair value items
The loss from fair value items was EUR 65 million, which was mainly driven by the macro equity hedge program due to higher equity markets, and alternative investments in the United States. This was partly offset by gains on interest rate hedge programs with an accounting match in the United States, which benefited from the widening of the spread between the swap and treasury curves.
Realized gains on investments
Realized gains on investments amounted to EUR 58 million and were mainly the result of divesting part of the corporate bond portfolio to reinvest in private placements in the Netherlands, together with adjustments to the investment portfolio in the United Kingdom to ensure a successful matching adjustment application for Solvency II.
Impairment charges
Net recoveries were EUR 64 million for the quarter, which included a legal settlement on previously impaired structured assets of EUR 78 million, while gross impairments remained very low.
Other charges
Other charges amounted to EUR 19 million, as a restructuring provision of EUR 36 million in the United States related to the announced cost savings over the 2016-2018 period was partly offset by a net gain of EUR 16 million related to the joint venture with Liberbank.
Run-off businesses
Earnings from run-off businesses improved to EUR 14 million.
Income tax
Income tax amounted to EUR 60 million in the fourth quarter. The effective tax rate on underlying earnings was 13%, and 11% for total income, which was mostly driven by tax benefits related to solar investments in the United States and a reduction of the corporate tax rate in the United Kingdom.
Return on equity
Return on equity was 8.3% in the fourth quarter of 2015.
Operating expenses
In the fourth quarter, operating expenses increased 11% to EUR 997 million, or 3% at constant currencies. The non-recurrence of a defined benefit plan release in the Netherlands more than offset lower business transformation costs in the United Kingdom and lower expenses in the United States.
Sales
Aegon's total sales increased 38% to EUR 2.9 billion in the fourth quarter of 2015, due to a stronger US dollar, higher asset management deposits and increased indexed universal life sales. Gross deposits increased 63% to EUR 22.3 billion, driven by higher deposits in Aegon Asset Management and strong growth in bank deposits in the Netherlands. Net deposits, excluding run-off businesses, increased to EUR 3.0 billion as a result of higher net inflows in Aegon Asset Management. New life sales declined 16% to EUR 440 million, as higher indexed universal life sales in the United States and favorable currency movements were more than offset by the impact of the withdrawal of the universal life secondary guarantee product in the United States and lower pension sales in the Netherlands and United Kingdom. New premium production for accident & health and general insurance increased 5% to EUR 238 million, as the effect of a stronger US dollar and higher health sales in Spain through Aegon's own and direct channels more than offset the impact of product exits in the United States.
Market consistent value of new business
The market consistent value of new business amounted to EUR 149 million. The positive effect of the stronger US dollar and product adjustments in the United States was more than offset by the negative impact of lower life sales and interest rates.
Revenue-generating investments
Revenue-generating investments increased by 11% during the fourth quarter of 2015 to EUR 707 billion. This was mainly due to the acquisition of Mercer's defined contribution record-keeping business and net inflows.
Capital management
Shareholders' equity declined by EUR 0.2 billion compared with the end of the previous quarter to EUR 23.9 billion on December 31, 2015. Revaluation reserves declined by EUR 0.9 billion to EUR 6.5 billion. Aegon's shareholders' equity, excluding revaluation reserves and defined benefit plan remeasurements, increased to EUR 19.0 billion - or EUR 8.97 per common share - at the end of the fourth quarter. This was the result of the net income generated in the quarter and favorable currency movements.
The gross leverage ratio improved to 27.0% in the fourth quarter, driven by the redemption of the USD 500 million 4.625% senior bond in December and the earnings generated in the quarter. Excess capital in the holding declined to EUR 1.4 billion. Dividends of EUR 0.3 billion paid to the holding by the United States and Central & Eastern Europe were more than offset by the redemption of the senior bond, capital injections, interest payments and holding operating expenses.
Aegon's Insurance Group Directive (IGD) solvency ratio[(a)] declined to 220% in the fourth quarter. The RBC ratio in the United States declined to ~460%, primarily due to asset adequacy reserve increases resulting from lower interest rates, and a dividend payment to the holding. In the Netherlands, the IGD ratio, excluding Aegon Bank, declined to ~240%, driven by credit and interest rate movements. The Pillar I ratio in the United Kingdom, including the with-profit fund, increased to ~165%, due to revised longevity assumptions following the completion of new experience studies. As of the first quarter of 2016, Aegon will discontinue reporting its capital position on a Solvency I basis and start reporting under Solvency II. Its estimated Solvency II ratio was approximately 160% at year-end 2015.
Cash flows
Operational free cash flows[(11)] amounted to EUR 22 million in the fourth quarter of 2015, driven by adverse market impacts and one-time items. Operational free cash flows excluding market impacts and one-time items amounted to EUR 377 million for the quarter. The charges from one-time items of EUR 80 million included asset adequacy reserve increases and a benefit related to changes in longevity assumptions in the UK. Market impacts amounted to EUR 275 million, mainly driven by credit and interest rate movements in the Netherlands.
Accounting changes
As communicated on January 13, 2016, Aegon will implement voluntary changes in its accounting policies, effective January 1, 2016, to reflect its updated strategic priorities. Additional details on the accounting changes, including the estimated financial impacts upon adoption, can be found in the Q4 2015 Condensed Consolidated Interim Financial Statements.
Share buyback
On January 13, 2016, Aegon announced and started its EUR 400 million share buyback program to neutralize the dilutive effect of the cancellation of the preferred shares in 2013. The first tranche of EUR 200 million will be repurchased before March 31, 2016.
As of February 17, 2016, Aegon has repurchased 20.5 million shares, with a total value of EUR 101 million. This represents an average repurchase price of EUR 4.90 per share. It will be proposed to shareholders at Aegon's next Annual General Meeting on May 20, 2016, to cancel any repurchased shares under this program. Weekly updates regarding the transactions will be available on aegon.com/sharebuyback.
Final dividend
At the Annual General Meeting of Shareholders on May 20, 2016, the Supervisory Board will, absent unforeseen circumstances, propose a final dividend for 2015 of EUR 0.13 per common share. If approved, and in combination with the interim dividend of EUR 0.12 per share paid over the first half of 2015, Aegon's total dividend over 2015 will amount to EUR 0.25 per common share. The final dividend will be paid in cash or stock at the election of the shareholder. The value of the stock dividend will be approximately equal to the cash dividend.
Aegon's Euronext-listed shares will be quoted ex-dividend on May 24, 2016, while its NYSE-listed shares will be quoted ex-dividend on May 23, 2016. The record date for both shares is May 25, 2016. The election period for shareholders will run from May 31 up to and including June 17, 2016. The stock fraction will be based on the average share price on Euronext Amsterdam from June 13 until June 17, 2016. The stock dividend ratio will be announced on June 22, 2016, and the dividend will be payable as of June 24, 2016.
Financial overview, Q4 2015 geographically
Holding,
other
The United New activities &
EUR millions Americas Netherlands Kingdom Markets eliminations Total
Underlying earnings before
tax by line of business
Life 85 83 19 4 - 191
Individual savings and
retirement products 153 - - (4) - 149
Pensions 72 57 7 2 - 138
Non-life - (13) - 14 - 1
Asset Management - - - 38 - 38
Other - 8 - - (39) (31)
Underlying earnings before
tax 310 135 26 54 (39) 486
Fair value items (64) 22 (31) 9 (1) (65)
Realized gains / (losses)
on investments (22) 33 38 10 - 58
Net impairments 72 (7) - (1) - 64
Other income / (charges) (29) - 14 (4) - (19)
Run-off businesses 14 - - - - 14
Income before tax 281 183 46 67 (41) 537
Income tax (37) (43) 17 (17) 20 (60)
Net income / (loss) 244 140 63 51 (20) 478
Net underlying earnings 250 107 58 32 (28) 420
Employee numbers
Dec. 31, Sep. 30, Dec. 31,
2015 2015 2014
Employees 31,530 28,675 28,602
of which agents 8,433 5,642 5,713
of which Aegon's share of
employees in joint ventures
and associates 1,983 1,694 1,614
Use this link for the full version of the press release.
ADDITIONAL INFORMATION
The Hague - February 19, 2016
Presentation
The conference call presentation is available on aegon.com as of 7.30 a.m. CET.
Supplements
Aegon's Q4 2015 Financial Supplement and Condensed Consolidated Interim Financial Statements
are available on aegon.com.
Conference call including Q&A
9:00 a.m. CET
Audio webcast on aegon.com
Dial-in numbers
United States: +1-212-444-0896
United Kingdom: +44(0)20-3427-1910
The Netherlands: +31(0)20-716-8257
Passcode: 7503394
Two hours after the conference call, a replay will be available on aegon.com
DISCLAIMERS
Cautionary note regarding non-IFRS measures
This document includes the following non-IFRS financial measures: underlying earnings before tax, income tax, income before tax and market consistent value of new business. These non-IFRS measures are calculated by consolidating on a proportionate basis Aegon's joint ventures and associated companies. The reconciliation of these measures, except for market consistent value of new business, to the most comparable IFRS measure is provided in note 3 'Segment information' of Aegon's Condensed Consolidated Interim Financial Statements. Market consistent value of new business is not based on IFRS, which are used to report Aegon's primary financial statements and should not be viewed as a substitute for IFRS financial measures. Aegon may define and calculate market consistent value of new business differently than other companies. Aegon believes that these non-IFRS measures, together with the IFRS information, provide meaningful information about the underlying operating results of Aegon's business including insight into the financial measures that senior management uses in managing the business. In addition, return on equity is a ratio using a non-IFRS measure and 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.
Local currencies and constant currency exchange rates
This document contains certain information about Aegon's results, financial condition and revenue generating investments presented in USD for the Americas and GBP for the United Kingdom, because those businesses operate and are managed primarily in those currencies. Certain comparative information presented on a constant currency basis eliminates the effects of changes in currency exchange rates. None of this information is a substitute for or superior to financial information about Aegon presented in EUR, which is the currency of Aegon's primary financial statements.
Forward-looking statements
The statements contained in this document 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: aim, believe, estimate, target, intend, may, expect, anticipate, predict, project, counting on, plan, continue, want, forecast, goal, should, would, is confident, will, and similar expressions as they relate to Aegon. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Aegon undertakes 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 Aegon's fixed income investment portfolios;
- 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 Aegon holds; and
- The effects of declining creditworthiness of certain private sector securities and the resulting decline in the value of sovereign exposure that Aegon holds;
- Changes in the performance of Aegon's investment portfolio and decline in ratings of Aegon's counterparties;
- Consequences of a potential (partial) break-up of the euro or the potential exit of the United Kingdom from the European Union;
- The frequency and severity of insured loss events;
- Changes affecting longevity, mortality, morbidity, persistence and other factors that may impact the profitability of Aegon's insurance products;
- Reinsurers to whom Aegon has ceded significant underwriting risks may fail to meet their obligations;
- 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;
- Changes in the availability of, and costs associated with, liquidity sources such as bank and capital markets funding, as well as conditions in the credit markets in general such as changes in borrower and counterparty creditworthiness;
- Increasing levels of competition in the United States, the Netherlands, the United Kingdom and emerging markets;
- Changes in laws and regulations, particularly those affecting Aegon's operations' ability to hire and retain key personnel, the products Aegon sells, and the attractiveness of certain products to its consumers;
- Regulatory changes relating to the pensions, investment, and insurance industries in the jurisdictions in which Aegon operates;
- Standard setting initiatives of supranational standard setting bodies such as the Financial Stability Board and the International Association of Insurance Supervisors or changes to such standards that may have an impact on regional (such as EU), national or US federal or state level financial regulation or the application thereof to Aegon, including the designation of Aegon by the Financial Stability Board as a Global Systemically Important Insurer (G-SII);
- Changes in customer behavior and public opinion in general related to, among other things, the type of products also Aegon sells, including legal, regulatory or commercial necessity to meet changing customer expectations;
- Acts of God, acts of terrorism, acts of war and pandemics;
- Changes in the policies of central banks and/or governments;
- Lowering of one or more of Aegon's debt ratings issued by recognized rating organizations and the adverse impact such action may have on Aegon's ability to raise capital and on its liquidity and financial condition;
- Lowering of one or more of insurer financial strength ratings of Aegon's insurance subsidiaries and the adverse impact such action may have on the premium writings, policy retention, profitability and liquidity of its insurance subsidiaries;
- The effect of the European Union's Solvency II requirements and other regulations in other jurisdictions affecting the capital Aegon is required to maintain;
- Litigation or regulatory action that could require Aegon to pay significant damages or change the way Aegon does business;
- As Aegon's operations support complex transactions and are highly dependent on the proper functioning of information technology, a computer system failure or security breach may disrupt Aegon's business, damage its reputation and adversely affect its results of operations, financial condition and cash flows;
- Customer responsiveness to both new products and distribution channels;
- Competitive, legal, regulatory, or tax changes that affect profitability, the distribution cost of or demand for Aegon's products;
- Changes in accounting regulations and policies or a change by Aegon in applying such regulations and policies, voluntarily or otherwise, which may affect Aegon's reported results and shareholders' equity;
- The impact of acquisitions and divestitures, restructurings, product withdrawals and other unusual items, including Aegon's ability to integrate acquisitions and to obtain the anticipated results and synergies from acquisitions;
- Catastrophic events, either manmade or by nature, could result in material losses and significantly interrupt Aegon's business; and
- Aegon's failure to achieve anticipated levels of earnings or operational efficiencies as well as other cost saving and excess capital and leverage ratio management initiatives.
Further details of potential risks and uncertainties affecting Aegon are described in its filings with the Netherlands Authority for the Financial Markets and the US Securities and Exchange Commission, including the Annual Report. These forward-looking statements speak only as of the date of this document. Except as required by any applicable law or regulation, Aegon 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 Aegon's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
All comparisons in this release are against the fourth quarter of 2014, unless stated otherwise.
Media relations
Debora de Laaf
+31-(0)-70-344-8730
gcc@aegon.com
Investor relations
Willem van den Berg
+31-(0)-70-344-8305
ir@aegon.com
PRN NLD
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