Unlocking the global potential 1
Dutch Analyst DinnerJos Streppel, CFO AEGON N.V.
Amsterdam,13 January 2009
Unlocking the global potential 2
Fundamentally attractive industry
Attractive prospects for life insurance and pension companies:
o Fundamental demographic and economic changes
... generating new customers and new needs…
… driving demand for financial solutions
o Opportunities arising from
current market conditions
Unlocking the global potential 3
Need for capital buffer
Insurance industry faces challenges globally
o Demand for
guarantees
o Trust
Customers
Regulators
o Focus on capital
o Take a more
conservative
stance
Increased required capital
Financial markets
o Volatility
o Illiquidity
o Closed capital
markets
Increased cost of capital & less availability of capital
Increased required capital
Unlocking the global potential 4
Developments for the insurance industry
o Risk management improved following 2002 equity market decline
o Although actual losses are manageable, unrealized losses on
investments may put pressure on solvency margins
o Scarce capital will lead to more efficient use of capital and better
rewards for risk taking
o Risk awareness among insurers and customers increases
o New models strive to retain the best of a decentralized and
centralized business model
Unlocking the global potential 5
o Liability-driven
investment
management
o Local risk decisions
within integrated
global risk framework
o Local knowledge
Liability creation &
managementCapital & risk
management
Asset
management
People
Knowledgeable and entrepreneurial
Future model provides a solid foundation
Unlocking the global potential 6
Impact on AEGON - current priorities
Capital
Costs
Contingency
The three C’s
Unlocking the global potential 7
Capital: improve capital efficiency
o Implement more
o Capital releases from back books
o Reinsurance
o Insurance linked securities
Optimize
capital
structure
Reduce
capital
intensity
o Further reduce
o Equity risk
o Interest rate risk
o Credit risk
Maximize
diversification
benefits
o Manage portfolio of risks
o Reset retention limits
o Build global risk pooling infrastructure
Unlocking the global potential 8
Costs: reduce operating expenses
o Cost reduction measures:
o More than EUR 150 million in AEGON’s major operating units in 2009
o Key actions to achieve this include:
o US: no wage increase in 2009 and restructuring
o NL: restructuring, reduction in projects
o UK: restructuring, cost containment
Unlocking the global potential 9
Contingency: strong capital position provides sufficient buffer
EUR 312 million
S&P risk-based insurance
capital model excess
capital in operating units
above AA level
Pro-formapost draw down
EUR 312 million
September 30, 2008
EUR 5.0 billion
(160%)
Insurance Group Directive
(IGD) surplus capital
EUR 8.0 billion
(195%)
o Insurance Group Directive surplus capital includes unrealized losses on bond portfolio
o Excluding unrealized losses IGD ratio would be ~225% and ~260% pro-forma
Additional capital buffer of
EUR 3 billion is sufficient
Unlocking the global potential 10
Concluding remarks
o Insurance industry attractive despite current challenges
o Capital scarcity will lead to more rational pricing for risks taken
o Insurance industry will focus on its core business again
o AEGON in a good position with focus on capital preservation
AEGON has the right strategy in the current environment
Positioned to benefit from future opportunities
Unlocking the global potential 11
Q&A
Unlocking the global potential 12
593Q08 resultsVI
57Other countries investment portfolio detailV
13Management of US general accountI
SlideAppendix
76CapitalVII
54Netherlands investment portfolio detaillV
48UK investment portfolio detailIll
27US investment portfolio detailII
Unlocking the global potential 13
Appendix I
Management of US general account
Unlocking the global potential 14
Q3: an extraordinary quarter
o The Q3 environment
- Acceleration of Debt Crisis
- Failures of major financial institutions
- Deleveraging of the financial sector
- Darkening economic outlook
- Gapping credit spreads and declining non-government bond
prices
- Increasingly aggressive global policy response
o Impact on AEGON
- High Other-than-temporary impairments due to large financial
defaults
- Losses on fair value items
- Increase in revaluation reserve, consistent with the broad market
decline
Unlocking the global potential 15
44 4437
27
9
25
1 2 48
17
64
82
48
17
-6-2
2
54
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 YTD
2008
Credit losses in the Americas remain manageable
Credit losses in bps of assets (includes only bonds and mortgages)
o During Q3, impairments in the US totaled USD 540 million
o Products are priced for expected losses of 25 – 30 basis points
o Almost all fixed income instruments are held as Available For Sale securities and as such are only impaired through earnings if
1) we don't have the ability to hold, or
2) we intend to sell them, or
3) we expect to receive less than full principal and interest
average of 25 bps
since 1990
Unlocking the global potential 16
o Our credit derivatives are corporate credit exposures, not mortgage or
subprime credit
o Risk of permanent loss on our tranched credit protection is very low due to
seniority
US fair value items: credit derivatives
EUR (53) million
EUR (41) millionEUR 1 million
EUR (87) million
Q3 YTDfair value change
EUR 0.8 billionEUR (38) millionCLO Total Return Swap
EUR 1.1 billionEUR 0.0 billion
EUR (27) millionEUR 0 million
Credit Default SwapsSold ProtectionPurchased Protection
Tranched Credit Protection EUR 6.4 billionEUR (6) million
Notional valueQ3
fair value change
Unlocking the global potential 17
Unrealized losses
The revaluation account increased by EUR 2.5 billion in Q3, due to the
increase in unrealized losses in AFS bonds
o Why such a large change?
o Is it consistent with generic market changes or is it idiosyncratic?
o Does it portend large future impairments?
Unlocking the global potential 18
Why such a large change in unrealized losses?
o As a life insurer, AEGON invests in long-term, investment grade bonds to
match long-term liabilities
o Long-term bond prices are very sensitive to changes in discount rates, and
market yields have been rising sharply for all non-government bonds
o Spiking yields are the result of massive deleveraging in the financial sector
o Therefore, the price declines reflect a large “liquidity” discount, in addition to
increasing default risk
Example
o The spread duration of AEGON’s AFS portfolio is ~5 years
o Therefore, every 20 basis point change in market yields will cause a 1%
decline in market price
o On a USD 90 billion AFS portfolio, that is a USD 900 million pre-tax change
o The yield on US investment grade corporate bonds (Lehman Index) has risen
from 5.79% to 7.83%, or about 200 bps, year-to-date
o 153 bps of that change occurred in the third quarter
Unlocking the global potential 19
Bond prices declined in all sectors
Value in EUR billion66.4
Value in USD billion95.0
100%
7%
9%
38%
16%
1%
9%
9%
2%
9%
Percentage of portfolio
amortized cost
94%89%Total AFS Bond portfolio
103%101%Sovereign
98%94%Utility
98%93%Industrial
91%83%Financial
89%83%Collateralized Debt Obligations
92%88%Non-housing related asset-backed securities
79%72%Non-agency RMBS and subprime
100%97%Agency MBS
95%90%Commercial MBS
Q2 08Market value /
amortized cost
Q3 08 Market value /
amortized costUS AFS bond portfolio
* Includes manufactured housing ABS
Unlocking the global potential 20
Generic or idiosyncratic?
o Generic investment grade interest rates rose by 140 to 190 basis
points
– AEGON USA’s portfolio market yield rose from 7.01 to 8.51% during Q3,
or 150 basis points
o Generic investment grade bond prices fell by 5 to 8%
– AEGON USA’s AFS bond portfolio prices declined from 94.1% of cost to
88.8% of cost, or by 5.6%
o Generic investment grade credit spreads widened by 150 to 250 basis
points
– An internal attribution analysis estimates that AEGON USA’s AFS portfolio
experienced 138 basis points of credit spread widening in Q3
Unlocking the global potential 21
Future impairments?
o Since 1970, the relationship between investment grade credit spreads and subsequent impairments has been weak
BBB spreads sorted lowest to highest with corresponding 1, 3, 5 year default losses for the period 1970-2007 1,2
0%
1%
2%
3%
4%
1997
1994
1996
1995
1992
1993
1998
1989
1978
1990
1991
1999
1988
1977
1973
1987
1979
1985
2000
1984
1986
2001
2002
1974
1970
1972
1983
1971
1980
1976
1981
1975
1982
1 Source of BBB data is the Federal Reserve Statistical Release H.15
2 The default losses are the annualized default losses for BBB bonds
using default rates from Moody’s Feb. 2008 publication “Corporate
Default and Recovery Rates, 1920 – 2007” assuming a 35%
recovery rate
BBB spread
5 year annualized default loss
3 year annualized default loss
1 year annualized default loss
Unlocking the global potential 22
o During the Depression, some correlation was seen, but milder than one might have guessed
BBB spreads sorted lowest to highest with corresponding 1 year BBB default losses for the corresponding period 1920-2007 1,2
0%
1%
2%
3%
4%
5%
6%
1965
1955
1956
1982
1946
1950
1959
1988
1962
1944
1981
1994
1996
1958
2004
1943
1993
1998
1989
1990
1968
1999
1972
1977
1987
1985
1927
2000
1984
1986
1929
2002
1940
1970
1982
1983
1980
1976
1938
1975
1961
1932
BBB spread
1 year default loss1 Source of BBB data is the Federal Reserve Statistical Release H.15
2 The default losses are for BBB bonds using default rates from
Moody’s Feb. 2008 publication “Corporate Default and Recovery
Rates, 1920 – 2007” assuming a 35% recovery rate
Future impairments?
Unlocking the global potential 23
2002 2003 2004 2005 2006 2007 Q3 YTD
2008
2001 2002 2003 2004 2005 2006 2007 Q3 YTD
2008
Significant shift into higher rated assets
� AA � BIG� BBB� A
Subprime in US investment portfolio
EUR 2.7 billion as per September 30, 2008
CMBS securities in US investment portfolio
EUR 5.9 billion as per September 30, 2008
o As stated in previous
presentations, AEGON USA has
restructured its asset portfolio
defensively in numerous ways:
– Reducing and upgrading
corporate exposures
– Reducing financial credit
exposures
– Selling most public common
equity exposures
– Upgrading CMBS and
subprime portfolios
– Increasing treasury and
liquidity balances
70% 49%70%74%73%65%40%25%
86%82%79%76%61%53%45%
� AAA
Unlocking the global potential 24
Reduced exposure to financials
o Actively reduced financial
sector exposure, esp. in 2007
and 2008
o Risk mitigation actions in the
corporate bond portfolio
Financials as % of general account
assets in US investment portfolio
EUR 11.2 billion as per September 30, 2008
2005 2006 2007 Q3 YTD
2008
14.6% 12.3%15.7%16.4%
Corporate high yield as % of general account assets
0%
1%
2%
3%
4%
5%
6%
2002 2003 2004 2005 2006 2007 Q3
YTD
2008� B � BB� CCC or less
Unlocking the global potential 25
Sector-specific risk mitigants
o Subprime: The portion of the subprime portfolio from which most impairments
will come is the hybrid mezzanine sector, which is USD 731 million book value,
and has a remaining unrealized loss of USD 449 million. Other portions are
expected to avoid significant principal losses.
o Alt-A/Option ARM: Most of AEGON’s portfolio is supersenior and structured
to withstand high collateral loss rates. Even with stressed loss levels on the
underlying collateral, principal losses should remain modest.
o CMBS: Over 86% of this portfolio is in AAA senior or supersenior tranches that
can withstand very stressed loss levels without principal loss. Non-AAA bonds
are conservatively underwritten.
o Corporate Bonds: The upgrading of the portfolio in recent years provides a
much more conservative ratings profile than we had in the last recession. The
recapitalization of the financial sector is removing a key source of risk.
Unlocking the global potential 26
Investments summary
o The large market price change in the AEGON AFS portfolio was
consistent with generic interest rate increases in Q3
o The macroeconomic environment is highly stressed. Credit spreads
presage a period of elevated impairments but AEGON expects them
to remain at manageable levels due to risk mitigation steps taken in
the past
Unlocking the global potential 27
Appendix II
US investment portfolio detailSeptember 30, 2008
Unlocking the global potential 28
Policyholder
account
22%
Off balance
sheet
37%
General
account
41%
US general account well diversified
Total investments
EUR 206 billion
General account
EUR 85.2 billion
Bonds
72%
Loans
16%
Shares
1%
Real estate
<1%
Other
11%
Note: data as per September 30, 2008
Unlocking the global potential 29
Asset allocation is typical for the US life industry
Industry data source: Lehman Brothers 2007 annual survey of top 20 Insurance Companies
11,4%
45,1%
2,0%
14,9%
6,7%
13,6%
0,9%
5,4%5,6%
46,0%
1,9%
18,3%
7,1%
13,3%
1,7%
6,1%
Cash & Govt Corp. Bonds EM Bonds MBS/ABS CMBS Mortgage
Loans
Equities /
Converts
Other
Asset allocation of USD 119.2 billion – September 30, 2008
* excludes policy loans
Total invested assets of EUR 83.3 billion*
� AEGON� Industry
Unlocking the global potential 30
A & above
62.6%
BBB
31.3%
Below B
0.4%
B
2.0%BB
3.7%
94% of US bond portfolio is investment grade
EUR 61 billion (USD 87 billion)* – September 30, 2008
AEGON US bond portfolio quality profile
* Based on market value of bonds – IFRS basis; Ratings based on hierarchy of S&P, Moody’s, Fitch, Internal, NAIC
Unlocking the global potential 31
Credit quality is typical for the US industry
2,4%3,7%
31,3%
62.6%
2,9%3,9%
26,0%
67,2%
A & above BBB BB B & below
Industry data source: Lehman Brothers 2007 annual survey of top 20 Insurance Companies. AEGON Rating
hierarchy used is: S&P, Moody’s, Fitch, Internal, NAIC
* Based on market values – IFRS basis
EUR 61 billion (USD 87 billion)* – September 30, 2008
AEGON US bond portfolio quality profile
� AEGON� Industry
Unlocking the global potential 32
Corporate bonds breakdown AEGON USA
Reit's
12%
Other - finance
12%
Insurance
20%
Brokerage
8%
Banking
48%
Industrial 60.4%
Financial 24.8%
Sovereign 0.5%
Utility14.3%
Transportation
6%Technology
6%
Other industry
1%
Energy
11%
Consumer non
cyclical
24% Consumer
cyclical
13%
Communications
16%
Capital goods
13%
Basic industry
10%
Utility other
3%
Natural gas
32%
Electric
65%
Total corporate bonds USD 54 billion (per September 30, 2008)
Unlocking the global potential 33
AAA
1,8%AA
10,0%
A
36,8%
BIG
7,5%
BBB
43,9%
Industrial
60,4%
Financial
24,8%
Utility
14,3%
Sovereign
0.5%
Ratings are based on a hierarchy of S&P, Moody’s, Fitch, Internal, NAIC
* Based on market values – IFRS Basis
US corporate bonds by quality and sector
EUR 38 billion (USD 54 billion)* – September 30, 2008
AEGON US corporate bond portfolio
Unlocking the global potential 34
US corporate bonds by quality and sector
22,7082,23711,3437,6061,279241Industrial
5,3854503,3451,5263331Utility
9,3401531,8124,5762,406393Financial
37,6122,83916,50013,8283,771675Total
180
Total
0
<BBB
119
A
0529Sovereign
BBBAAAAA(in EUR million)
Ratings are based on a hierarchy of S&P, Moody’s, Fitch, Internal, NAIC.
60.4%5.9%30.2%20.2%3.4%0.7%Industrial
14.3%1.2%8.9%4.0%0.1%0.1%Utility
24.8%0.4%4.8%12.2%6.4%1.0%Financial
100.0%7.5%43.9%36.8%10.0%1.8%Total
0.5%
Total
0%
<BBB
0.4%
A
0%0.1%0.0%Sovereign
BBBAAAAA
Unlocking the global potential 35
AA
11.7%
A
4.7%
BBB
7.5%
BB & Lower
2.4%
AAA
73.7%
CMBS
27,6%
Residential
MBS 26,3%
Non-
Housing-
related ABS
27,9%
Housing-
related ABS
13,3%
CDO 4,9%
Structured assets of US
High quality Diversified
AEGON US structured assets portfolio quality profile
EUR 21.5 billion (USD 30.7 billion)* – September 30, 2008
Ratings are based on a hierarchy of S&P, Moody’s, Fitch, Internal, NAIC
* Based on amortized costs – IFRS Basis
Unlocking the global potential 36
US structured assets detail
Mortgage-backed and Asset-backed Securities
Amortized costs as of September 30, 2008
(EUR million)
(1,146)
(60)
(61)
(1)
1
(59)
(294)
(85)
(20)
(188)
(446)
(5)
(182)
(132)
(92)
(36)
(286)
Unrealized
change from
June 30, 2008
(3,519)21,495 5,646 15,850 Total MBS & ABS
(191)1,054 300 756 Total CDOs
(801)2,867 1,496 1,371 Total housing ABS
(10)170 110 60 Mfg housing
(426)1,056 755 301 Subprime floating
(364)1,641 631 1,010 Subprime fixed
(285)2,125 731 1,393 Other ABS
(73)371 0 371 Rev.Mtg. Floaters
(745)6,001 2,901 3,099 Total non-housing ABS
(94)
(366)
(1,255)
(635)
(331)
(180)
(36)
(528)
Unrealized
gains /
(losses)
931 559 371 Autos
2,946 1,611 1,335 Credit cards
5,639 120 5,520 Total MBS
1,679 19 1,660 Neg.Am. Floaters
1,291 76 1,215 Alt-A fixed
1,365 0 1,365 Agency MBS
Jumbos
Total CMBS
Ratings hierarchy of S&P,
Moody’s, Fitch, Internal, NAIC
933 24 909
5,934 831 5,103
Total<AAAAAA
Unlocking the global potential 37
US commercial mortgage backed securities
(113)78 191 -17 27 42 105 CMBS and CRE CDOs
(528)
Pre-taxrevaluations
5,406
Market value
5,934
Amortized costs
15
<BBB
169
A
104 542 5,103 CMBS Securities
BBBAAAAAExternal ratings hierarchy of S&P, Moody’s, Fitch(all figures in EUR million)
o The CMBS portfolio has been structured defensively, with over 80% AAA-rated
securities
o Below-AAA exposures have been positioned conservatively, particularly for 2006
and 2007 vintage deals, when standards were most aggressive
o CMBS and Commercial Real Estate CDOs are collateralized by real estate loans,
CMBS bonds and REIT debt. A majority are AAA-rated, and the below-AAA
holdings were almost all originated prior to 2005
o Our stress-tests show limited impairments, even under environments of substantial
decline in commercial real estate values
Unlocking the global potential 38
AEGON USA CMBS portfolio
Amortized Cost data based on ratings hierarchy of S&P, Moody’s, Fitch, Internal, NAIC as of 9/30/2008
Capital Structure Classification
CMBS -- Total Exposure 2008 2007 2006 2005 Pre-2005
Amortized
Cost Fair Value
Unrealized
Gain/(Loss)
AAA $390 $1,959 $1,877 $847 $2,377 $7,449 $6,872 ($577)
AA - 114 220 121 380 835 681 (154)
A 43 67 40 12 119 280 231 (49)
BBB - 61 59 13 42 174 137 (37)
BIG - 16 6 - - 22 20 (2)
Total 433 2,216 2,202 993 2,917 8,760 7,941 (819)
($ in millions by Amortized Cost)
Vintage Year
Unlocking the global potential 39
US prime and near-prime residential MBS
o Almost all of AEGON’s Prime and Near-prime Residential MBS are rated AAA
o The Near-prime portfolio is composed of primarily Fixed-rate Alt-A and Negative
Amortization Floating-rate mortgage securitizations
o A majority of the “near prime” portfolio is supersenior, meaning that it has many
times the required credit enhancement needed to obtain a AAA rating
o Even in the current stressed environment, the risk of impairment on these securities
is low, and our margin of safety remains high
1,044 1,679 ---19 98 8 30 1,524 Neg. am. floaters
1,329 1,365 ------1,365 -GSE Guaranteed
753 933 -3 8 13 11 7 598 293 Prime Jumbo
960 1,291 --62 15 --419 796 Alt-A
109
-
AAA SSUP
2,613
-
AAA SSNR
2,783
371
AAA SNR
4,384
299
Market value
5,639
371
Cost price
0
-
<BBB
69
-
A
3 47 15 Residential mortgage-backed securities
---Rev. mortgage floaters
BBBAAAAA
MEZZ
Ratings hierarchy of S&P, Moody’s, Fitch, Internal (EUR million)
SSNR = Super Senior; SNR = Senior; MEZZ = Mezzanine; SSUP = Senior Support
Unlocking the global potential 40
(426)
(364)
Pre-taxrevaluations
630
1,277
Market value
1,056
1,641
Cost price
314
32
<BBB
37
13
A
102 302 301 Subprime and second lien securitizations– floating rate
155 431 1,010 Subprime and second lien securitizations –fixed rate
BBBAAAAARatings hierarchy of S&P, Moody’s, Fitch, Internal(all figures in EUR million)
o Negligible subprime CDOs: EUR 17 million held at fair value
o Senior subprime tranches hold up well under stress tests, and are unlikely to be
permanently impaired
o EUR 511 million are mezzanine tranches of securitizations collateralized by
subprime hybrid-ARM loans, and these represent AEGON’s riskier subprime
holdings
o The remaining margin of safety on these mezzanine tranches has declined
o The unrealized loss on the EUR 511 million of these mezzanine tranches was
EUR 314 million at September 30. If we take subprime impairments in the future, this
is where they are likely to arise
o Nevertheless, this represents a manageable exposure for AEGON
US subprime summary
Unlocking the global potential 41
US subprime unrealized losses
Amortized costs / (unrealized loss) September 30, 2008(EUR million)
(790)
(219)
(382)
(189)
Unrealized
loss
(1)
(1)
-
-
Unrealized
loss
(355)
(2)
(314)
(39)
Unrealized
loss
(158)
(13)
(46)
(99)
Unrealized
loss
Amortized
costs
Amortized
costs
Amortized
costs
Amortized
costs
Unrealized
loss
Amortized
costs
(276)
(203)
(22)
(51)
2,697
586
826
1,286
Total
3
3
-
-
Sub/residual
706 1,068 920 Total
18 77 488 Closed end
2nd lien
177 740 368 Fixed rate
1st lienHybrid /
ARM 1st lien
Collateral
511 251 64
SubordinatedSeniorInsured
Unlocking the global potential 42
US sub-prime and second lien exposure
* Second lien mortgages composed primarily of loans and alt-a borrowers
Amortized costs as of September 30, 2008(EUR million)
0%
1
-
1
-
BBB-
11%
308
14
272
22
<BBB
1%
24
24
-
-
BBB wrapped
0%
6
6
-
-
AA-wrapped
1%
38
38
-
-
<BBB wrapped
1%
25
-
25
-
BBB+ wrapped
1%
34
9
24
-
A wrapped
0%
1
-
1
-
A+
100%4%4%1%14%7%6%12%37%
2,698
587
982
1,129
Total
103
103
-
-
BBB-wrapped
103
3
76
25
BBB
16
4
11
1
A
375
287
13
76
AA wrapped
201
6
141
54
AA
151 314 997 Total
-22 71 2nd lien mortgages*
20 266 665 Subprime 1st lien mortgages –fixed rateSubprime 1st lien mortgages –
floating rate
Ratings hierarchy of S&P, Moody’s, Fitch, Internal, NAIC
131 27 261
AA+AAA
wrappedAAA
Market value as of September 30, 2008
(EUR million)
0%
1
-
1
-
BBB-
5%
96
13
72
12
<BBB
1%
14
14
-
-
BBB wrapped
0%
4
4
-
-
AA-wrapped
1%
22
22
-
-
<BBB wrapped
1%
13
-
13
-
BBB+ wrapped
1%
24
7
17
-
A wrapped
0%
1
-
1
-
A+
100%3%2%0%12%7%6%14%45%
1,907
367
578
961
Total
61
61
-
-
BBB-wrapped
39
2
20
17
BBB
8
3
5
1
A
231
160
10
61
AA wrapped
143
5
99
39
AA
109 273 867 Total
-16 60 2nd lien mortgages*
14 231 587 Subprime 1st lien mortgages –fixed rate
Subprime 1st lien mortgages –floating rate
Ratings hierarchy of S&P, Moody’s, Fitch, Internal, NAIC
95 25 220
AA+AAA
wrappedAAA
Unlocking the global potential 43
US sub-prime by vintage
Amortized costs - fixed as of September 30, 2008(EUR million)
239 -25 --15 -114 85 2007
145 22 --17 -1 -105 2006
160 ----6 5 -150 2005
100%2%2%0%7%5%2%24%59%1,128
-
584
Total
22
-
-
Below
BBB
25
-
-
BBB
1
-
1
A
76
-
59
AA
wrapped
54
-
33
AA
20 266 665 Total
---2008
14 152 326 2004 & prior
Ratings hierarchy of S&P, Moody’s,
Fitch, Internal, NAICAA+
AAA
wrappedAAA
Amortized costs - floating as of September 30, 2008(EUR million)
0%
1
-
-
-
-
1
BBB-
3%
25
-
2
10
-
13
BBB+
wrapped
2%
24
-
17
-
-
8
A
wrapped
0%
1
-
-
-
-
1
A+
324 137 23 6 -3 27 -110 2007
328 57 52 3 -91 60 -54 2006
227 78 --1 32 38 -78 2005
100%28%8%1%1%14%13%3%27%
984
27
76
Total
272
-
-
Below
BBB
76
-
-
BBB
11
-
2
A
13
-
12
AA
wrapped
141
-
15
AA
131 27 261 Total
-27 -2008
6 1 20 2004 & prior
Ratings hierarchy of S&P,
Moody’s, Fitch, Internal,
NAIC
AA+AAA
wrappedAAA
Unlocking the global potential 44
US second lien by vintage
* Second lien mortgages composed primarily of fixed rate loans to prime and alt-a borrowers
Amortized costs as of September 30, 2008(EUR million)
18%
103
-
-
59
30
14
BB-
wrapped
1%
6
-
-
-
-
6
AA-
wrapped
100%
587
-
234
143
66
144
Total
7%
38
-
-
10
28
-
<BBB
wrapped
2%
13
-
3
10
-
-
Below
BBB
4%
24
-
-
15
-
9
BBB
wrapped
---220 -11 -2007
-9 -36 -3 -2006
0%2%1%49%1%4%12%
3
-
-
3
BBB
9
-
-
-
A
wrapped
4
-
-
4
A
287
-
3
28
AA
wrapped
6
-
-
6
AA
22 71 Total*--2008
8 66 2004 & prior
2005
Ratings hierarchy of S&P,
Moody’s, Fitch, Internal,
NAIC
-5
AAA
wrappedAAA
Unlocking the global potential 45
US CDO summary
o No purchases of ABS CDOs since 2001
o Therefore, negligible subprime exposure
o Primarily corporate credit collateral
145 Corporate bonds
1,054Total
14 Asset backed securities
704 Leveraged bank loans
Commercial real estate and CMBS
Collateral by type
192
EUR million
37 A
226 AA
1,054Total
17 <BBB
756 AAA
BBB
Tranches by rating
17
EUR million
Unlocking the global potential 46
No synthetic subprime CDO’s
o No synthetic subprime or mortgage-related CDOs
o Sold protection primarily on very senior tranches of the CDX (index of 125
investment grade corporate bonds)
o Accounting for all credit derivatives is mark to market through earnings
o Market volatility is currently high, but risk of permanent loss is very low
AAA192 (6)10% - 15%
4,663 (67)Total
14 (6)Equity
AA/AAA
AAA
AAA
Implied rating
752 (17)15% - 30%
3,671 (34)30% - 100%
Notional (EUR million)
Fair value (EUR million)
By attachment point
35 (5)<10%
US investment portfolio detail
Unlocking the global potential 47
99.9
85.9
94.1
64.1
77.8
89.85
Sep 30
Price (% of Par)Yield to MaturityCredit Spreads
5.54
6.58
5.25
13.25
10.89
6.35
Jun 30
8
198
246
176
313
176
∆
135
514
474
1155
1020
441
Sep 30
127
316
227
979
708
265
Jun 30
0.5%99.4(.07)5.47U.S. Agency MBS
(7.8%)93.11.618.19CMBSInvestment Grade
(5.2%)99.31.887.13U.S ABS [Non-Housing]
(5.1%)67.61.4214.67U.S ABS [Housing]
(11.5%)87.83.0213.91U.S. CorporateHigh Yield
(7.8%)97.51.487.83U.S. Corp. Investment Grade
∆Jun 30∆Sep 30Lehman Index
o During Q3, non-government investment grade bonds’
- Yields rose by 140 to 190 basis points
- Prices fell by 5% to 8%
- Credit spreads widened by 170 to 250 basis points
Market movement Q3
US investment portfolio detail
Unlocking the global potential 48
Appendix Ill
UK investment portfolio detailSeptember 30, 2008
Unlocking the global potential 49
Policyholder
account
85%
Off balance
sheet
5%
General
account
10%
UK general account mainly bonds
Total investments
EUR 60 billion
General account
EUR 6 billion
Bonds
99%
Loans
<1%Shares
1%
Note: data as per September 30, 2008
Unlocking the global potential 50
UK general account portfolio
89%Total100%
Value in EUR billion5.6
Value in GBP billion4.4
7%
2%
7%
11%
48%
3%
2%
7%
7%
1%
5%
Percentage of
book value
94%Utilities
91%Mortgage securities
91%Industrial
98%Government
84%Financial
95%Energy
92%Consumer, non-cyclical
92%Consumer, cyclical
88%Communications
90%Basic industries
89%Asset backed securities
Market value /
amortized costUK general account*
Note: data as per September 30, 2008
Unlocking the global potential 51
Rating split of UK general account
0%0%0%83%B
1%1%0%58%BB
-5%16%21%85%BBB
6%48%42%87%A
-19%18%37%91%AA
17%17%0.0%97%AAA
Difference
%
Fund
%
Index
%
Market value /
amortized costRatings split*
o The rating split of the UK general account demonstrates the
conservative positioning of our portfolio
o A downgrade below investment grade is a trigger for considering a sale
o Other main trigger being concerns about the credit
Note: data as per September 30, 2008
Unlocking the global potential 52
UK investments conservatively positioned
The UK general account is conservatively positioned
versus the iBoxx corporate bond index for all investment grade
corporates rated AA to BBB
-11%45%56%Financial
10%13%3%Sub-sovereigns
-2%8%10%Asset/mortgage-backed
4%35%31%Non-financials
Difference
%
Fund
%
Index
%Sector split*
Note: data as per September 30, 2008
Unlocking the global potential 53
Comfortable with our exposure to UK financials
-11%45%56%84%Total
0%8%9%87%Other financial
2%12%10%85%Insurance
-13%25%37%83%Banks
Difference
%
Fund
%
Index
%
Market value /
amortized costFinancials break down*
o We have been cautious on banks and are therefore underweight in
our portfolio
Note: data as per September 30, 2008
Unlocking the global potential 54
Appendix lV
Netherlands investment portfolio detail September 30, 2008
Unlocking the global potential 55
Policyholder
account
31%
Off balance
sheet
19%
General
account
50%
Dutch general account well diversified
Total investments
EUR 63 billion
General account
EUR 31 billion
Bonds
55%
Loans
32%
Shares
5%
Real estate
7%
Other
<1%
Note: data as per September 30, 2008
Unlocking the global potential 56
All collateralized assets investment grade
* Buy to let
** Non-conforming
106%-117000017CMBS94%-351046339SME86%-402860622910887CDO
96%0800017RMBS NC**
97%-134000034RMBS BTL*
99%-1298700314970RMBS92%-13173001511147ABS
94%88%
Market value / book
value (%)
-124-53
Unrealized loss
1,997440
Total exposure
00
<BBB
13178
A
1521951,556Total5058254CLO
BBBAAAAAExternal ratings hierarchy of S&P, Moody’s, Fitch(all figures in EUR million)
AA
10%
A
6%
AAA
77%
BBB
7%
Note: data as per September 30, 2008
Netherlands investment portfolio detail
Unlocking the global potential 57
Appendix V
Other countries investment portfolio detail September 30, 2008
Unlocking the global potential 58
Policyholder
account
18%
Off balance
sheet
44%
General
account
38%
Other countries general account mainly bonds
Total investments
EUR 14 billion
General account
EUR 5 billion
Bonds
82%
Loans
13%
Shares
3%
Other
2%
Note: data as per September 30, 2008
18%
Unlocking the global potential 59
Appendix VI
3Q08 results
Unlocking the global potential 60
5007(13)(32)(33)
(120)691
Q3 07 Americas The
Netherlands
United
Kingdom
Other countries Holding and
other
Q3 08
o Underlying earnings before tax in Q3 impacted by
– lower fees in US and UK
– reserve strengthening, mainly related to VA’s sold pre-2004 in US
– higher mortality charges in US life reinsurance
– provisioning in NL for unit linked policies and charge on a group of
pension contracts
Underlying earnings impacted by world financial markets turmoil
Underlying earnings before tax (EUR million)
(22)%7%
Underlying earnings development at constant currency
(18)%(39)%(31)%(17)%
Unlocking the global potential 61
Financial markets and impairments had a negative impact
(407)(47)
(384)500
(329)
14(5)
Underlying
earnings Q3 08
Fair value items
performance
Gain/(losses) on
investments
Impairment
charges
Other
income/(charges)
Income tax Net income Q3 08
o Net income mainly impacted by underperformance of fair value items and
impairment charges
– Impairment charges in Q3 mainly related to Lehman Brothers, Washington
Mutual (EUR 336 million) and US housing related asset-backed securities
(EUR 46 million)Underlying earnings to net income development (EUR million)
Unlocking the global potential 62
Fair value items performance
(54)
(41)
123
(384)(224)
(61)
(60)
(67)
Americas Netherlands Holding Total
Total underperformance of fair value items (EUR million)
Canadian segregated funds
Alternative investments**
Total return annuities*
VA GMWB*
Credit derivatives
* Represents closed books of business
** Alternative investments include hedge funds, private equity, real estate, and other
Private equity Debt held at FV
Unlocking the global potential 63
30Life reinsurance
(11)%9,6018,567IGP
(13)%3,2502,834Pensions & AM
19%638758Retail mutual funds
(38)%8955Life reinsurance
Gross deposit overview267%4931,811Fixed annuities
(2)%934912Variable annuities
New life sales overview
(98)%401BOLI/COLI
Retail life insurance
(in USD million)
(16)%191160
∆Q3 07Q3 08
Underlying earnings before tax(USD million)
o Fundamentals of business remain
intact but results impacted by financial
markets turmoil
o Economic downturn impacted sales of
high net worth and middle market
products
o Very strong FA deposits as result of
additional distribution, steeper yield
curve and increased demand
o VA deposits relatively flat
o Net deposits of USD 3 billion
o VNB up 9% driven by strong fixed
annuity production
o IRR at 12.3%
Americas – net deposits of USD 3 billion
699
578
Q3 07 Q3 08
Unlocking the global potential 64
(46)%7239Total (APE)
Gross deposit overview
(15)%647547Savings deposits
(78)%8118Pensions & AM
New life sales overview
(69)%5116Pensions (APE)
Life insurance (APE)
(in EUR million)
10%2123
∆Q3 07Q3 08
o Underlying earnings declined to
EUR 74 million, mainly due to costs of
modifying unit-linked insurance
products and charges related to a
group of pension products
o Life sales down 46%, due to
slowdown in group pension market
o Individual life sales up 10%
o VNB of EUR 8 million
o IRR at 11.5%
The Netherlands – individual life sales up 10%
Underlying earnings before tax(EUR million)
107
74
Q3 07 Q3 08
Unlocking the global potential 65
Gross deposit overview
(53)%18386Pensions & AM
New life sales overview
(1)%235232Pensions (APE)
Total (APE)
Life insurance (APE)
(in GBP million)
0%302303
6%6771
∆Q3 07Q3 08
o Sales growth across most lines of
businesses
o Underlying earnings decline due to
lower financial markets and
investments for growth
o VNB up 13% on higher margins and
volumes
o IRR improves to 13.6%
United Kingdom – continued strong sales
Underlying earnings before tax(GBP million)
46
28
Q3 07 Q3 08
Unlocking the global potential 66
Other countries – strong growth of deposits
Gross deposit overview
134Variable annuities
50218Retail mutual funds
45%153222Pensions & AM
New life sales overview
(38)%6943Recurring premium
Total (APE)
Single premium
(in EUR million)
(47)%9952
(72)%29383
∆Q3 07Q3 08
o Strong increase in deposits driven by
retail mutual funds and variable
annuity sales in Asia
o Weakness in financial markets
resulted in decline in life sales
o Underlying earnings in Central &
Eastern Europe remained robust
o VNB decreased to EUR 32 million
mainly as a result of lower sales
o IRRs remain at high level
Underlying earnings before tax(EUR million)
55
42
Q3 07 Q3 08
Unlocking the global potential 67
842 (662)
59
729 (315)
(313)
(29) 312
Q2 08 Excess
Capital
Estimated
Statutory
Earnings
Investments in
country units
Capital
preservation
actions*
Dividend paid
to holding
Change in
target capital
Other
(including
currency
effects)
Q3 08 Excess
Capital
Excess capital roll-forward
Excess capital in operating units development Q3 2008 (EUR million)
* Capital preservation actions includes UK ViF securitization and hedging
Unlocking the global potential 68
9,412(9)(142)(258)(49)1,077
(2,499) (329) 11.621
June 30, 08 Net income Change in
revaluation
reserves
Movements
in foreign
currency
translation
reserves
Coupons on
perpetuals
(net of tax)
Dividend
common
shares
Repurchased
and sold own
shares
Other
changes
Sept 30, 08
Shareholders’ equity (EUR million)
Shareholders’ equity development
o Shareholders’ equity excluding revaluation reserve is 71.5% of total capital
base – above target
o Decline in revaluation reserves driven by wider credit spreads
o Revaluation reserve stands at negative EUR 5.5 billion
Unlocking the global potential 69
Calculation of financial flexibility
756Financial flexibility
312Excess capital in operating units
444Additional leverage capacity
20,800Actual capital base
21,244Maximum capital base allowed
14,870
1,568
19,232
5,458
9,412
(EUR million)
Shareholders’ equity excl. revaluation reserve
Target is minimum 70% of total capital base in
shareholders’ equity
20,800Total capital base
14,870Shareholders’ equity
excl. revaluation reserve
Group equity
Capital leverage
Revaluation reserve
Shareholders’ equity
Financial flexibility (EUR billion)
June 30, 08 Sept 30, 08
� Additional leverage capital� Excess capital in operating units:
available capital -/- required capital for AA-rating
0.8
1.8
Unlocking the global potential 70
40%20%
Assumed equity market decline of40%20%
Assumed equity market decline of
Contingency: equity market sensitivity
o Lower fees
o Reserve strengthening for VA guarantees (old book before 2004; new VA is delta hedged)
o DAC unlocking*
-700
-1,600
-900
-1,900
* Acceleration of amortization of deferred acquisition costs
o Direct exposure
o Reserve strengthening for guarantees
o Impact of first 20% decline can be absorbed by capital preservation actions
Estimated impact on earnings (12 month period, EUR million)
Estimated impact on capital (EUR million)
Based on equity markets as of September 30, 2008
� Direct
� Fees
� DAC� Guarantees
� Direct
� Fees
� Guarantees
Unlocking the global potential 71
o Approximately 63% of living benefit guarantees currently hedged or reinsured
o GMIB requires policyholder to exercise into life annuity after waiting period
o The NAR is the net amount at risk, which is the sum by individual policy, the
difference between fund value and the guarantee value**
US variable annuity guarantees
0.20.639%0.82.1Reinsurance
0.43.5-0.017.3GMDB
0.64.14%0.819.4Total death benefits
14.9
8.2
5.5
1.2*
Hedgedfund value
63%
94%
100%
13%
% of fund value
hedged
0.9
0.3
0.1
0.5
Statutoryreserve
3.6
0.7
0.8
2.1
Net amountat risk
23.5Total living benefits
8.7Reinsurance
5.5Direct - GMWB
9.3Direct - GMIB
(USD billion)
Totalfund value
Per September 30, 2008
* Reinsurance capped at USD 200 million benefit
** Before reinsurance and hedging
Unlocking the global potential 72
2%1%
Assumed*
interest rate decline of2%1%
Assumed*
interest rate decline of
Interest rate sensitivity
o Lower funding costs
o Higher capital gains
175
270
-250
-450
* Assumes a parallel shift in the yield curve
o Reserve strengthening for guarantees
Impact on earnings (12 month period, EUR million)
Impact on capital (EUR million)
Based on interest rates as of September 30, 2008
Unlocking the global potential 73
Limited DAC at risk, only 11% of DAC related to US annuities
100%4%29%6%61%Total
7%7%Life reinsurance
2%2%Institutional products
27%27%1%Pensions & asset man.
11%11%Ind. savings
& retirement
53%4%2%5%41%Life &
protection
TotalOther
countriesUKNetherlandsAmericas
DAC per line of business
Data as of December 31, 2007
Unlocking the global potential 74
Impact of potential credit impairments manageable
Impact on IFRS net income Impact on available capital
Example:o 100 bps of losses on USD 120 billion of assets*
o 20% DAC offset(possible range 0% – 60%, depending on business line)
o 35% tax offset(depending on geography)
-624
-1.200
-445
240
336
Losses DAC offset Taxes
IFRS net
income
IFRS net
income
-780
-1.200
-550
420
Losses DAC offset Taxes
Impact on
available
capital
Impact on
available
capital
No DAC
offset
(USD million) (EUR million) (USD million) (EUR million)
* includes bonds and mortgages of US fixed income portfolio
Unlocking the global potential 75
Assumptions:
o Extreme possibility of ‘frozen’ markets for years anticipated
o Impaired capital markets liquidity test assumes an extended period and normal liquidity only resuming in 2 years
Results:
o Our liquidity position remains very strong even ignoring contingent liquidity sources
o Under a conservative best estimate basis, AEGON has positive net inflows into 2010
Liquidity management
(EUR billion)
� Available liquidity under stress scenario� Required liquidity under stress scenario
Stress scenario
Even under a prolonged stress environment
AEGON unlikely to be a “forced seller” of securities into distressed markets
0
20
40
60
80
100
7day 1mo 3mo 6mo 1yr 18mo 2yr
Strong liquidity position
Stress scenario assumptions
o Extreme possibility of ‘frozen’ markets has been anticipated for years
– Impaired capital markets liquidity test assumes an extended period and normal liquidity only resuming in 2 years
o Immediate and permanent increase in interest rates
o Liabilities are assumed to withdraw at their earliest conceivable date
Unlocking the global potential 76
Appendix VII
Capital
Unlocking the global potential 77
~89% of
common
shares
~11% of
common
shares
100% of
preferred
shares
AEGON secured additional core capital of EUR 3 billion
AEGON N.V.
Public Market Dutch StateVereniging AEGON
Capital facility
EUR 3 billion
Non-voting securities
EUR 3 billion
EUR
EU
R
Unlocking the global potential 78
Capital position
AEGON to reinforce capital buffer significantly above AA level requirements
Substantial buffer to protect against further market deterioration
EUR 8.5 billion
(205%)
Insurance Group Directive
(IGD) surplus capital
EUR 842 million
S&P risk-based insurance
capital model excess
capital in operating units
above AA level
September 30, 2008
EUR 5.0 billion
(160%)
EUR 312 million
June 30, 2008
74%Capital Base Ratio
(debt / equity ratio)71.5%
+ Underlying
earnings
- Market
movements
+ De-risking
+ Capital
releases
Expectedchanges in Q4
+ EUR 3 billion