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-Well-positioned in the Americas Well positioned in the Americas
Mark Mullin CEO Americas
New York City – December 2009
Key messages
o The US market is the largest market in the world and AEGON is a top player
o We have transformed the organization to simplify the business
– Capture synergies
– Economies of scale
– Share best practices
o We are focused in key attractive markets of life and retirement
o We have a strong franchise that is positioned to win
Local knowledge. Global power. 2
Our ambition
“To be a leader in helping customers secure their financial futures”
o Rebalance capital allocation
o Improve growth and returns
…resulting in sustainable profitable growth
o Reduce financial markets risks
o Manage AEGON as an international company
Local knowledge. Global power. 3
Restructure organization
Our action plan
1
Create a more balanced mix of business through disciplined
portfolio management
– balance growth and earnings quality
– balance product offering
– balance risk/reward profile
Restructure organization
and aggressively pursue organizational synergies 2
3 Capitalize on competitive advantages
and take advantage of opportunities within each business unit
Local knowledge. Global power. 4
Retirement Pensions
Transformed organization by aligning complementary businesses
Mon Work SVS LTC Life site
AFP TCM DIA ADMS TAM TRS
WFG TRM Clark
Individual Employer Life and Alternative Life Savings and Solutions and
Protection Protection Markets Markets Reinsurance Reinsurance Retirement Pensions
Serving Serving Serving Brazil A
retail life savings and employee Canada global
customers retirement needs through Mexico business
needs the worksite BOLI/COLI
o Combined 12 business units into 3 core US divisions
o Disciplined business portfolio review
– Run-off institutional spread-based business
– Exit automotive credit market
Local knowledge. Global power. 5
Leading in the US life and retirement market
o Largest life insurance and pension market in the world
o Industry fundamentals and demographic attractiveness have both improved
o Our competitive advantages and distribution capabilities position us as a leader in
each business unit
#5 in both term and universal life
#7 in DC providers by assets
#10 in total individual annuity sales
Life
and
Protection
Employer
Solutions and
Pensions
Individual
Savings and
Retirement
Serving the life cycle needs of our customers
*Life and annuity rankings based on LIMRA data. Rankings for ES&P based on independent study and includes Synthetic GICs
Local knowledge. Global power. 6
si nificant economies of o Service excellence and
Capitalizing on competitive advantages and opportunities
Life and Protection
Employer Solutions and
Pensions
Individual Savings and Retirement
o
o
o
Market is underserved
and under-protected
Low cost provider with
significant economies of g
scale
Track record of success
in recruiting and
building effective
distribution
o Growing reliance on
worksite distributed
products
o Service excellence and
award winning
innovative participant
programs
o Total retirement
outsourcing solutions
o Greater awareness of
retirement needs
o One-stop shopping for
protection,
accumulation and
retirement income
solutions
o Continue to attract top
tier talent and increase
penetration of broker
dealer channel
Strong Transamerica brand
Local knowledge. Global power. 7
Q&A
For questions please contact Investor Relations +31 70 344 8305
P.O. Box 85 2501 CB The Hague The Netherlands
Local knowledge. Global power. 8
Appendix – Fulfilling our ambition
Local knowledge. Global power. 9
First things first
o First priority: full repayment of capital support
o EUR 1 billion repaid on November 30 – first step towards full repayment
Geographic mix
Capital allocation*
Global businesses (Life reinsurance, Asset Management, European Variable Annuities)
Central & Eastern Europe, Asia and Latin America
Western Europe
US
* Capital in units adjusted for revaluation reserves
Local knowledge. Global power. 10
Im rove rowth and return from existin business
Key achievements
o Freed-up EUR 4.2 billion since June 2008 – 60% capital efficiency and 40% de-risking
o Excess capital of EUR 3.7 billion*
o Running off institutional spread-based business
o Repaid EUR 1 billion as first step towards full repayment
Full repayment to the Dutch State
Improve growth and return from existing business
Reallocate capital towards businesses with higher growth and return prospects
o Cost savings measures target for 2009 of EUR 150 million achieved by Q3 2009
o Global asset management operational
o Launched variable annuities in the UK, Netherlands, France and Japan
… while strengthening the franchise
o Reduced risk to equity markets, interest rates and credit markets
Reduce financial markets risks
Manage AEGON as an international company
p g g
* Q309 was EUR 4.8 billion -/- EUR 1.1 billion repaid to Dutch State
Local knowledge. Global power. 11
illing
am
bitio
nP
en
sio
Fu
lsAmericas – grow in Pensions and At-Retirement
Achievements
Reta
il l
ife
o New distribution added
o Offering high quality service
o Top-5 player
ns
o Outgrown market for last 10
years
o Leading position in health care
segment of 403(b) market
o Service excellence and award
winning innovative programs
o Attracted top-tier VA wholesalers
o Redesigned VA product
o Reduced time-to-market to 3
months
Pen
sio
nA
t R
eti
rem
en
t
Opportunities Execution
o Largest and most sophisticated
life market, but still underserved
o More rational pricing
o Create common product portfolio
across diverse distribution
channels
o Capitalize on direct marketing
data mining techniques
o Total retirement outsourcing
continues
o Positive retirement demographics
o Continue to broaden distribution
o Focus on smaller & midsized
plans (underserved)
Fu
lf
o Growing reliance of worksite
distributed products
o Leverage total retirement
outsourcing capabilities and
capitalize on institutional trends
within the health care segment
o ~80 million baby boomers to
retire next 18 years
o Greater awareness for retirement
solutions
o Consolidate multiple operating
system platforms
o Offer excellent customer service
o Increase penetration of
independent broker/dealer
channel
filling
am
bitio
n
Local knowledge. Global power. 12
illing
am
bitio
nP
en
sio
o Outstandin roduct line
Fu
lsThe Netherlands – improve position in SME pensions
Achievements
Reta
il l
ife
o Stable market share
o Well positioned in broker channel
ns
o Institutional market leader
o Dedicated SME sales
organization
o Innovative modular pension
product launched
o Strong growth of pension
administration business
o Products economically priced,
improved VNB
o Increased retention
o Launched new annuity products
Pen
sio
nA
t R
eti
rem
en
t
Opportunities Execution
o Retreating government
and employers increases
need for savings for later
o Increased regulatory
transparency on commissions
o Increase in retirement age
(from 65 to 67)
o Multi distribution channels
o New generation products
o Develop own direct distribution
channel
o Improve organization of Retail
and Intermediary
o Improve SME pensions market
position
o Corporates continue to outsource
o Focus on top 200 brokers
o Dedicated SME organization
o Outstanding product line
Fu
lf
pensions g p
o Further invest in pension
administration
o Growing market as policies expire
with mandatory annuitization
o High growth of internal portfolio
expirations (roll-over)
o Introduce new generation of
income products with guarantees,
including variable annuities
o Multi channel approach with more
focus on internet
filling
am
bitio
n
Local knowledge. Global power. 13
illing
am
bitio
nP
en
sio
Fu
lsUK – leverage strong pension position for At-Retirement market
Achievements
Reta
il l
ife
o High proportion of non-mortgage
individual protection sales
o Exited Group Risk business
o Improved brand recognition
ns
o Top 3 market position
o Strong increments and new
entrant sales to existing schemes
o Improvement in asset
management performance
o #1 in intermediated At-Retirement
with most comprehensive offering
(leading drawdown, annuity and
VAs)
o ~80% of our pensions is rolled
over to annuity with AEGON
Pen
sio
nA
t R
eti
rem
en
t
Opportunities Execution
o Significant protection gap
o Attractive product for
intermediaries and banks
o Ongoing investment in brand
o Development of simple bank
products
o Auto-enrolment plans increasing
existing scheme membership
o Government encouraging private
o Investment in SIPP* proposition
o Selective use of capital and
bespoke scheme pricing
Fu
lf
provision
o Pricing and capital requirements
improving
o Focus on administrative and
asset management capabilities
o Significant demographic trends
requiring income in retirement
o ~15%pa growth in market to 2012
o Greater awareness for retirement
solutions
o Benefiting from SIPP* investment
o Adjusting pricing ahead of
Solvency II
filling
am
bitio
n
* Self-Invested Personal Pension Local knowledge. Global power. 14
illing
am
bitio
nP
en
sio
Fu
lsCentral & Eastern Europe – profitable growth
Achievements
Reta
il
o Top 3 in Poland and Hungary
o Introduced innovative products in
Czech Republic and Slovakia
o Start-ups in Romania and Turkey
ns
o Strong asset management
performance
o High growth in pension fund
members to 2.1 million currently
o Out-performance of asset
management Pen
sio
nA
t R
eti
rem
en
t
Opportunities Execution
o Market ready for new type of life
products
o Roll-out of household insurance
throughout region
o Launching new products,
developed with US expertise
o Leverage on Hungarian
household knowledge – one
administrative platform
o Add new ‘lottery’ members in
Poland
o Favorable demographics
o Develop Pension Advisor channel
(tied)
o Capitalize on banking and broker
Fu
lf
relationships
o Asset management out-
performance
o First retirees from private pension
funds will enter to the market
in 2-3 years
o New product developed
(regulated)
o Direct distribution
filling
am
bitio
n
Local knowledge. Global power. 15
illing
am
bitio
nS
pai
Fu
lAdditional opportunities for growth
Achievements
Asia
o Rank #6 in China*
o Accelerated growth in India
o Obtained license in Japan,
VA products launched
o Sold Taiwanese life business
n
o Established five joint ventures
with local savings banks
o Exclusive access to over 2,200
bank branches and 4.5 million
banking clients
o Operational efficiencies captured
with centralized back-office
o Established presence in Brazil
and Mexico
o Strong presence delivering
worksite solutions
Sp
ain
Lati
n A
meri
ca
Opportunities Execution
o Serving largest Asian markets:
China, India, Japan
o Growth driven by improving
penetration, growing wealth and
ageing population
o Leverage best practices
o Benefit from strength of local
partners
o Further grow business to realize
scale
o Underserved Spanish market
remains attractive
o Consolidation among local saving
o Leverage deep bancassurance
knowledge and high-performance
back office platform
Fu
lf
banks (caja’s) - grow with
partners
o Sharing best practices
o Short time-to-market
o Increase penetration of Life with
existing clients of the caja’s
o Large, underserved markets
o Alternative forms of distribution
o Delivering high value solutions to
middle-market through agents
o Leverage on US knowledge
o Develop bancassurance
relationships
filling
am
bitio
n
* Among foreign-invested insurers in 1H09 Local knowledge. Global power. 16
Development of underlying earnings before tax per quarter
Pre-crisis Current < 2008 Q3 2009
EUR
650
Million
Earnings impacted by
o Run-off institutional spread-based
business ~EUR 80 million
o Equity markets ~EUR 100 million
o De-risking ~EUR 40 million
EUR
417
million*
* Excluding exceptional items
Local knowledge. Global power. 17
Mrk
et
imp
act
Underlying earnings run-rate sensitive to USD
Post-crisis run-rate
> 2010
EUR/USD Quarterly
UEBT (EUR million)
1.30 450 - 500
1.45 425 - 475
ark
et
imp
act
18 Local knowledge. Global power.
1.60 400 - 450
Primary drivers of underlying earnings growth
o Growth of business
o Cost savings
o Redeployment of cash
MM
an
ag
em
en
t acti
on
s
o Equity markets medium term growth rate 8-9% p.a.
o a e o equ y pos ons comp e e en
Reduced financial markets risks
o Risk transfer through reinsurance
o Macro-hedge related to retail variable annuity portfolio
o Run-off of Institutional spread-based business
o Product redesign (Variable Annuities)
S l f it iti l t d d 2007
Americas
The Netherlands
Local knowledge. Global power. 19
o Reduced risk profile of investment portfolio
o Sale of credit derivatives (tranched credit protection)
o Sale of equity positions completed end 2007
o Interest rate risk almost completely hedged
o 50% of equity exposure embedded in guarantees hedged
o Exit Taiwan – reduced long-term interest sensitivity
Investments
Other countries
– Launched VA in UK NL France Ja an
Manage AEGON as an international company
o Global asset management operational
o Variable Annuities:
– Use product competencies from US and UK to growth markets
– Hedging centralized in the US
– European platform in Dublin
– Launched VA in UK, NL, France, Japan , , p,
o European data center in Edinburgh
Local knowledge. Global power. 20
Appendix - Americas
Local knowledge. Global power. 21
Life and Protection
Current
Portfolio
Value to
AEGON
Opportunities
Competitive
Advantages
o Largest America’s segment from both an earnings and EV perspective
o Business is primarily mortality and morbidity risk based products of life insurance, supplemental health, specialty insurance and long term care
o Diverse distribution network focused on target markets at all income levels
o USD assets under management of USD 35 billion
o Serving the protection needs of retail customers
o High quality, consistent distributable earnings
o Limited capital markets leverage
o Mortality and morbidity risks provide earnings diversification
o Low cost operator, organized to take advantage of economies of scale
o Multiple specific brands targeting key market segments
o Proven expertise in recruiting and distribution relationship management
o Large direct marketing operation
o High quality service
o Create a common product portfolio across diverse distribution channels
o Capitalize on direct marketing data mining techniques
o Leverage sales and marketing best practices across the group
o Aggressive expense management
Local knowledge. Global power. 22
AEGON
Individual Savings and Retirement
Current
Portfolio
Value to
AEGON
Opportunities
Competitive
Advantages
o Delivers investment products and solutions to individuals
o Manufacturer and distributor of fixed and variable annuities and mutual funds
o Provider of personalized retirement planning
o USD 78 billion of assets under management
o Serving the at-retirement needs of customers
o Knowledge and experience leveraged to other country units
o Product diversity and multi-channel distribution
o Diversified revenue mix of spread and fees
o One stop shopping – protection, accumulation & retirement income solutions
o Leadership position in fixed annuities enhances distribution relationships
o Strong wholesaling capabilities segmented by product and channel
o Excellent customer service capabilities – focused on solutions not products
o Strong risk management people, processes and policies
o Continue to attract top tier talent and increase penetration of the independent broker dealer channel
o Expand proportion of fee based business
o Consolidate multiple operating system platforms
Local knowledge. Global power. 23
Employer Solutions and Pensions
Current
Portfolio
Value to
AEGON
Opportunities
Competitive
Advantages
o Top provider of employee benefit products and services, including retirement plans, worksite marketed life and health products, synthetic GICs, and executive compensation consulting
o USD 116 billion of assets under management
o Serving the accumulation needs of customers through their employer
o Pensions is a growth market with attractive demographics
o Fee based revenues provide diversification benefit
o Solid margins
o Service excellence and award winning innovative participant programs
o Market leading technical expertise with Clark Consulting
o Total retirement outsourcing solutions
o Leader in the healthcare segment of the 403(b) market
o Continued growth strategy supported by US retirement demographics
o Capitalize on growing reliance of worksite distributed products
o Leverage sales and marketing best practices across the group
o Aggressive expense management
Local knowledge. Global power. 24
Alternative Markets
Current
Portfolio
Value to
AEGON
Opportunities
Competitive
Advantages
o Brazil: 2009 life premiums of USD 145 million
o Mexico: ranked 9th in worksite life insurance sales
o Canada: CND 10 billion in assets, with a life insurance market share of 5.4% and a segregated fund market share of 2.7%
o Provides a quality entry point and local expertise for platforms outside the US, but within North and South America
o Latin American markets are underserved and offer future growth potential
o Canadian market offers a stable, mature business profile
o AEGON is a strong strategic partner providing access to broad product portfolio and expertise
o Payroll deduction capabilities in both Brazil and Mexico and focused on niche areas that are underserved by larger players
o Ease of doing business; one visit selling in Canadian market with full suite of standardized products and services
o Above average growth in underdeveloped markets (both Brazil and Mexico currently spend less than 1.5% of GDP on life insurance)
o Delivering high value solutions in the Canadian market to the underserved middle market via the life agency channel
Local knowledge. Global power. 25
AEGON
Life Reinsurance
Current
Portfolio
Value to
AEGON
Opportunities
Competitive
Advantages
o Business consists primarily of mortality risk with smaller segments consisting of supplemental health and equity guarantee-related risks
o TARe ranks 2nd in US and 7th globally in life reinsurance new business
o Primary markets are the US, Korea, Japan, Mexico, Brazil and the EU
o Provide expertise and support for affiliates in reinsurance-related activities
o Vanguard for entry into markets by retail businesses
o Diversification in market/pricing cycles for retail life businesses o Diversification in market/pricing cycles for retail life businesses
o Full service provider; risk/capital management products and underwriting services
o Value added services; product consulting and development services, prescription based automated and contract underwriting services
o Highly experienced team with sophisticated administrative and modeling platforms to support business and clients needs
o Accelerated growth in emerging markets – Latin America and Asia
o Continue to expand value-added services in the US and in the EU
o Expand business model to include longevity risks, group life risks
Local knowledge. Global power. 26
Americas’ underlying earnings before tax per quarter
Pre-crisis Current Post-crisis
<2008 Q3 2009 >2010
USD
700
Earnings impacted by
o Run-off institutional
spread-based business
o Equity markets
o De-risking
USD
430*
million
Earnings drivers
o Growth of business
o Cost savings
o Redeployment of cash
o Financial markets
million
* Excluding exceptional items (USD 30 million)
Local knowledge. Global power. 27
Quarterly run-rate underlying earnings before tax
Pre-Crisis Current (<2008) Change (Q3 09)
(USD million) (USD million) (USD million)
Americas 630 (160) 470
(excluding IGP spread)
IGP spread 70 (110) (40)
Total Americas 700 (270) 430
Excluding IGP spread (160) o (70) lower equity based fees and higher DPAC amortization on variable annuity, mutual fund and pension businesses
o (50) investment de-risking (reduced hedge funds, high yield, BBB and credit derivatives)
o (40) employee pension plan expenses
IGP spread (110) o Spread compression driven by shortening of institutional liabilities during financial crisis
o IGP run-off loss follows maturity pattern of internally transferred assets and amortizes off over next four years
Local knowledge. Global power. 28
Impact of run-off institutional spread-based business
Spread balances (USD billion)
o Institutional cash shortfall due to shortening of liabilities
– 12 month notice putable funding agreements (USD 6 billion)
– Municipal GICs (USD 5 billion)
– Extendable MTNs (USD 1 billion)
o Remainder of US businesses cash flow positive through the crisis
Local knowledge. Global power. 29
exchan e for cash
Impact of run-off institutional spread-based business
Pre-Crisis Current (<2008) Change (Q3 09)
(USD million) (USD million) (USD million)
IGP spread per quarter 70 (110) (40)
o USD 10 billion internal asset transfer from institutional to other US portfolios in
exchange for cash g
– Transfer pricing basis – what other portfolios priced for
– Actual book value of USD 11.4 billion
– Unrealized loss before tax of USD (1.4) billion amortized through run-off
institutional earnings:
• 2009 (0.3) billion • 2012 (0.2) billion
• 2010 (0.3) billion • 2013 (0.2) billion
• 2011 (0.3) billion • 2014 (0.1) billion
o Run-off will reduce sensitivity to credit markets going forward and free up USD 0.8
billion of capital by the end of 2010
Local knowledge. Global power. 30
Mean reversion – equity return assumptions
Negative DAC unlocking above cap �
Corridor cap
Corridor floor Corridor floor
Positive DAC unlocking below floor �
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 '03 '04 '04 '04 '04 '05 '05 '05 '05 '06 '06 '06 '06 '07 '07 '07 '07 '08 '08 '08 '08 '09 '09 '09
o Equity return assumptions adjusted quarterly within the corridor
o Corridor based on current information and management best estimate
o Over last six years, corridor breached once in Q207 (floor) and then in Q308-Q109
(cap)
o Underlying earnings impact is approximately USD 60 million per point change
in equity growth rate assumption
Local knowledge. Global power. 31
–
Fair value items
Liabilities
Assets
Macro
Hedge
Local knowledge. Global power.
o GMWB (USD 14 billion) - delta / rho hedged
o Segregated funds (USD 3.4 billion) – 92% delta hedged
o Total return annuities (USD 1.4 billion) – closed blocks
o Hedge funds (USD 0.7 billion) – reduced by 1.7 billion reduced by 1.7 billion o Hedge funds (USD 0.7 billion)
o Private equity (USD 0.7 billion) and REAP (USD 0.7 billion)
o Credit derivatives – super senior program unwound
o Capital protection – 50% of unhedged retail VA
o Total return swap (USD 1.3 billion)
o Put options (USD 0.8 billion)
Balances reflect ending balances as of September 30, 2009 32
Improved US impairment losses
Gross impairments (USD million)
US housing (ABS and RMBS)
Corporate Bonds
US commercial mortgages (CMBS and CML)
Other
Recoveries (USD million)
Local knowledge. Global power. 33
o yn e c so Variable life insurance
Diversified product offering
Life and Protection
Individual Savings
and Retirement
Employer Solutions
and Pensions
Alternative Markets
Life Reinsurance
o Traditional life
o Term life
o Universal life
o Equity indexed universal life
o Variable life
o Fixed annuities
o Variable annuities
o Mutual funds
o 401(k) plans
o 403(b) plans
o Defined benefit
o Variable annuities
o Mutual funds
S th ti GIC
o Canadian life and segregated funds
o Latin America life insurance products
o Bank and corporate owned life insurance
o Term coinsurance
o Annuities
o Product consulting and development
o Automated underwriting
Local knowledge. Global power. 34
o Health and supplemental health
o Long term care
o Synthetic GICs
o ome serv ceartners o Worksite ecialists
Diversified distribution
Life and Protection
Individual Savings
and Retirement
Employer Solutions
and Pensions
Alternative Markets
Life Reinsurance
o General agents
o Registered representatives
o Independent marketing organizations
H i
o Banks
o Wirehouses
o Broker/dealers
o Financial planners
o Institutional partners
o Consulting firms
o Broker/dealers
o Banks
o Independent producers
o Worksite specialists
o General agents
o Company representatives
o Consultants
o Company representatives (business to business)
Local knowledge. Global power. 35
o Home service agents
o Direct marketing
p
o Agents
sp
o Employee benefit brokers and benefit consultants
o Third-party administrators
Appendix – Q3 2009 results
Local knowledge. Global power. 36
Highlights
o Return to profit
o Repayment of EUR 1 billion core capital to Dutch State (November 30, 2009)
o Further strengthened capital position
o Revaluation reserves improve by EUR 3.3 billion
o Profitable sales and net deposits, evidence of strong franchise
o Continued execution of strategy
Local knowledge. Global power. 37
351 (184) 126 (100) (285) 48 189 145
Return to profit
o Net income improved as a result of
– improved result on fair value items, due to rising financial markets,
partly offset by equity hedging
– substantially lower impairments on US housing market related assets
– reversal of prior year tax charges
Underlying earnings to net income development in Q3 2009 (EUR million)
(184) 126
Total impact Fair Value items
EUR (58) million
351 (100) (285) 48 189 145
Underlying US equity Other Gains/Losses Impairment Other Income tax Net income
earnings hedging fair value on investments charges Q3 2009
before tax items
Q3 2009
Local knowledge. Global power. 38
UEBT impacted by exceptionals and de-risking
o Exceptional items:
– Provisions related to improvement of consistency of customer records in UK: EUR 43 million
– Accelerated amortization of DPAC related to run off IMD: EUR 23 million
o De-risking impact of EUR 40 million
Underlying earnings before tax in Q3 2009 (EUR million)
351 66 417 40
Underlying earnings before
tax excluding exceptional
items and impact of de-
risking
Underlying
earnings
before tax
Q3 09
Exceptional
items
Underlying
earnings before
tax pre
exceptionals
Impact of
2009
de-risking
Local knowledge. Global power. 39
Continued profitable sales, evidence of a strong franchise
o US retail life sales up 11%
o NL new life sales rose 63%
o UK sales were stable
o Net deposits* of EUR 2 billion more than double compared with Q2 09
o VNB of EUR 169 million impacted by lower contribution from the UK and Spain
o IRR substantially exceeding hurdle rate
New life sales Net deposits* Value of new business (EUR million) (EUR million) (EUR million)
469
Local knowledge. Global power.
* Excluding institutional guaranteed products
Q2 09 Q3 09 Q2 09 Q3 09 Q2 09 Q3 09
40
857 1,980 181 169
-400
Further reduced earnings sensitivity to equity markets
Estimated impact on net income* (EUR million)
Q3 2009 Equity market Q2 2009
Q1 2009
-250 -20% 225 +20% 275 -525
400 -900
-125 125 -10% +10% -225 150
-400 200 200
Estimated impact on capital* (EUR million)
Equity market
450 -475
+20% 425 -475 -20% 600 -700
-225 225
-225 225 +10% -400 -10% 300
* Based on equity markets as of September 30, 2009
Local knowledge. Global power. 41
Q2 ital
Excess capital supported by active capital management
Excess capital development Q3 2009 (EUR billion)
3.5 (0.2) (0.2) 0.2 0.6 0.3 0.4 1.0 (0.6) 4.8
Capital preservation
of EUR 0.9 billion
Q2 09 Excess Credit Rating Interest rates Capital De-risking Statutory Equity Other Q3 Q3 09 Excess
capital impairments migration US & equity effeciency earnings offering impacts capital market impact
Maintain larger capital buffer
Numbers may not add up due to rounding
Local knowledge. Global power. 42
. o e-r s ng
Successful capital release program
Capital released (EUR billion)
0.3
0.4
0.6
0 4
0.6
0.3
0.3
1.6
4.2 o Capital efficiency
– Ca. 60% of capital preservation initiatives
– Generally no material earnings impact
– High RoC benefit
– More efficient use of capital without meaningfully changing risk profile
D i ki
� De-risking
� Capital efficiency
0.7
0.6 2.6
0.4
Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Total
o De-risking
– Ca. 40% of capital preservation initiatives
– Negative earnings impact, but partly reversable
– Neutral to negative RoC impact
– Lowering capital requirements by lowering risk profile
Continue capital preservation actions
Local knowledge. Global power. 43
. . . . . . . . .
Strong improvement in revaluation reserves
o Shareholders’ equity increased significantly as a result of improved revaluation reserves
and the issuance of common shares
o Improvement in revaluation reserves driven by narrowing credit spreads
and lower risk-free interest rates
Core capital* development Q3 2009 (EUR billion)
7 6 7.6 3 3 3.3 1.0 1 0 (0 3) (0.3) 11.6 11 6 3.0 3 0 14.6 14 6 1 8 1.8 16 4 16.4
Q2 2009 Change in Equity offering Other Q3 2009 CCCS Core capital Revaluation Core capital
shareholders' revaluation Changes** Shareholders’ Q3 2009 reserves excluding
equity reserves equity revaluation
reserves
Q3 2009
* Core capital is the sum of shareholders’ equity and EUR 3 billion of convertible core capital securities
** Other changes includes net income, change in foreign currency translation reserve, coupons on perpetuals and other
Local knowledge. Global power. 44
Disclaimer
Forward-looking statements
The statements contained in this presentation 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 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:
o Changes in general economic conditions, particularly in the United States, the Netherlands and the United Kingdom;
o 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;
o The frequency and severity of insured loss events;
o Changes affecting mortality, morbidity and other factors that may impact the profitability of our insurance products;
o Changes affecting interest rate levels and continuing low or rapidly changing interest rate levels; interest rate levels and continuing low or rapidly changing interest rate levels; o Changes affecting
o Changes affecting currency exchange rates, in particular the EUR/USD and EUR/GBP exchange rates;
o Increasing levels of competition in the United States, the Netherlands, the United Kingdom and emerging markets;
o Changes in laws and regulations, particularly those affecting our operations, the products we sell, and the attractiveness of certain products to our consumers;
o Regulatory changes relating to the insurance industry in the jurisdictions in which we operate;
o Acts of God, acts of terrorism, acts of war and pandemics;
o Effects of deliberations of the European Commission regarding the aid we received from the Dutch State in December 2008;
o Changes in the policies of central banks and/or governments;
o Litigation or regulatory action that could require us to pay significant damages or change the way we do business;
o Customer responsiveness to both new products and distribution channels;
o Competitive, legal, regulatory, or tax changes that affect the distribution cost of or demand for our products;
o Our failure to achieve anticipated levels of earnings or operational efficiencies as well as other cost saving initiatives; and
o 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.
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