Aegon Ord Regulatory News (0Q0Y)

12 Apr 2010 07:00

AEGON to enhance disclosure with new reporting format

THE HAGUE - As previously announced, AEGON will introduce a new reportingformat that better aligns with the way AEGON manages its businesses, beginningon May 12 when the company announces its financial results for the firstquarter of 2010. Today's announcement is intended to provide an explanation ofthe new reporting format and prepare financial analysts and media with the keychanges to ensure proper comparison of 2010 first quarter results with previousquarters.

Going forward, AEGON will report its underlying earnings primarily on the following segments:

AmericasThe NetherlandsUnited KingdomNew markets

AEGON will continue to provide details of underlying earnings by lines of business. "Underlying earnings" changed based on the new reporting format, however, net income remains unchanged.

AEGON CFO Jan Nooitgedagt stated: "In recent months, we have implemented anumber of significant reorganizational changes within AEGON's businesses,particularly in our operations in the Americas. In doing so, we recognized theneed to enhance our reporting and ensure that it reflects the way we manage ourbusiness. As part of this process, we have also evaluated our disclosures andeliminated elements which are redundant or not particularly useful with the aimof providing the most relevant measurements for the progress of our business."

In anticipation of AEGON's first quarter 2010 results on May 12, AEGON is providing its full-year 2008 and quarterly 2009 earnings and sales numbers according to the new format to facilitate comparison. Tomorrow, at 4.30 p.m. CET, Mr. Nooitgedagt will host a briefing in London to provide a further explanation of the changes to analysts and investors. Mr. Nooitgedagt's presentation will be available at 8 a.m. CET on April 13 on the corporate website. The meeting will also be broadcast live via AEGON's website: www.aegon.com.

AEGON's new reporting structure will also include a number of other changes:

The use of "operating earnings" will be discontinued to further simplify AEGON's reporting and to focus on the key performance indicator, "underlying earnings."

"Run-off businesses", mainly consisting of US institutional spread-based business, will be reported in a separate line.

Earnings from AEGON Asset Management will also be reported separately within "New markets" as of Q1 2010.

"Earnings from associates" will be reported on an underlying earnings basis and sales from associates will be reported proportionately as well.

KEY PERFORMANCE INDICATORS UNAUDITED amounts in millions EUR 2009 Reported Revised

Underlying earnings before tax

1,160 1,185 Net income 204 204 New life sales 2,045 2,100 Gross deposits* 23,628 27,616 Value of new business (VNB) 767 767 Return on equity 5.9% 5.7% * Gross deposits were previously reported excluding Institutional Guaranteed Products. In the revised format gross deposits exclude Run-off businesses. FINANCIAL OVERVIEW UNAUDITED amounts in millions EUR 2008 2009 Revised Revised Full First Second Third Fourth Full year quarter quarter quarter quarter year

Underlying earnings geographically

Americas 723 (146) 289 324 350 817 The Netherlands 378 72 129 102 95 398 United Kingdom 148 8 20 (9) 33 52 New markets 101 31 49 42 48 170 Holding and other (112) (63) (72) (69) (48) (252)

Underlying earnings before tax 1,238 (98)

415 390 478 1,185 Fair value items (1,645) (167) (17) (196) (164) (544)

Realized gains/(losses) on investments 61 144

21 38 315 518 Impairment charges (1,047) (385) (394) (286) (212) (1,277) Other income/(charges) (12) (24) (352) 48 5 (323) Run-off businesses 350 77 (9) (34) (47) (13) Income before tax (1,055) (453) (336) (40) 375 (454) Income tax (27) 280 175 185 18 658 Net income (1,082) (173) (161) 145 393 204 Net underlying earnings 962 (64) 331 348 390 1,005 New life sales Life single premiums 9,304 1,974 1,397 1,674 2,017 7,062

Life recurring premiums annualized 1,665 370 345 323 355 1,393 Total recurring plus 1/10 single 2,595 567

484 492 557 2,100 New life sales Americas 652 142 136 145 143 566 The Netherlands 219 62 32 52 93 239 United Kingdom 1,407 279 239 245 247 1,010 New markets 317 84 77 50 74 285

Total recurring plus 1/10 single 2,595 567

484 492 557 2,100

New premium production accident & health insurance 614 164 146 126 125

561 New premium production general insurance 68 12

11 12 21 56

Gross deposits (on & off balance)

Americas 27,594 5,936 4,710 4,138 4,404 19,188 The Netherlands 2,665 462 720 1,145 1,107 3,434 United Kingdom - 52 61 29 35 177 New markets 4,732 1,082 1,032 1,526 1,177 4,817 Total gross deposits excluding run-off businesses 34,991 7,532 6,523 6,838 6,723 27,616 Run-off businesses 6,972 674 209 51 (4) 930 Total gross deposits 41,963 8,206 6,732 6,889 6,719 28,546

Net deposits (on & off balance)

Americas 7,995 2,004 827 553 385 3,769 The Netherlands (571) 55 170 355 619 1,199 United Kingdom - 49 52 21 29 151 New markets 595 (314) (171) 753 18 286 Total net deposits excluding run-off businesses 8,019 1,794 878 1,682 1,051 5,405 Run-off businesses (3,771) (2,954) (1,372) (3,272) (6,513) (14,111) Total net deposits 4,248 (1,160) (494) (1,590) (5,462) (8,706) GLOSSARY

These descriptions are intended to provide general guidance, but are not exhaustive and are subject to change.

OPERATING SEGMENTS

Americas

Covers business units operating in the United States, Canada, Mexico and Brazil, including any of the units' activities located outside these countries.

The Netherlands

Covers businesses operating in the Netherlands.

United Kingdom

Covers businesses operating in the United Kingdom.

New markets

Covers businesses operating in Central & Eastern Europe, Asia, Spain and France as well as AEGON's variable annuity activities in Europe and AEGON Asset Management.

ITEMS EXCLUDED FROM UNDERLYING EARNINGS

Fair value items

Fair value items include the 'over' or 'under' performance of investments andguarantees held at fair value for which the expected long-term return isincluded in underlying earnings, the gains (losses) on real estate and hedgeineffectiveness.Certain assets held are carried at fair value, and managed on a total returnbasis, with no offsetting changes in the valuation of related liabilities.These include assets such as hedge funds, private equities, real estate limitedpartnerships, convertible bonds and structured products. Underlying earningsexclude any over- or underperformance compared to management's long-termexpected return on these assets. Based on current holdings and asset classreturns, the long-term expected return on an annual basis is 8-10%, dependingon the asset class, including cash income and market value changes. Theexpected earnings from these asset classes are net of DPAC where applicable.In addition, certain products offered in the Americas contain guarantees andare reported on a fair value basis, including the segregated funds offered inCanada and the total return annuities and guarantees on variable annuities inthe United States. The earnings on these products are impacted by movements inequity markets and risk free interest rates. Short-term developments in thefinancial markets may therefore cause volatility in earnings. Included inunderlying earnings is a long-term expected return on these products, and anyover- or underperformance compared to management's expected return is excludedfrom underlying earnings. The fair value movements of certain guarantees andthe fair value change of derivatives that hedge certain risks on theseguarantees in the Netherlands and Variable Annuities Europe (included in Newmarket) are excluded from underlying earnings.

Realized gains or losses on investments

Includes realized gains and losses on available-for-sale investments, as well as mortgage and loan portfolios.

Impairment charges

Impairments (reversals) on available-for-sale shares and bonds, including the effect of deferred policyholder acquisition costs and mortgage and loan portfolios on amortized costs and associates.

Other income or chargesOther income or charges is used to report any items which cannot be directlyallocated to a specific line of business. No changes have been made to what waspreviously reported in this line.

Run-off businesses

Business units where management has decided to exit the market and to run-offthe existing block of business. Currently, this line includes the run-off ofthe institutional spread-based business and structured settlements blocks ofbusiness in the United States.

LINES OF BUSINESS

Life

'Life' covers products with mortality, morbidity and longevity risks. These include traditional life and universal life products, as well as endowment, term and whole life insurance products sold in the Americas and the Netherlands. Also included are annuity products sold in the Netherlands and term insurance and annuity products sold in the United Kingdom. Most of the business written in countries included in 'New Markets' is also reported as part of the 'Life' line, with the exception of general insurance sold by Hungary, pensions sold in Central & Eastern Europe, health insurance sold in Spain as well as business from variable annuities Europe and asset management.

Accident and health business comprises products with morbidity risk such as accidental death and dismemberment insurance, critical illness, cancer treatment, disability, income protection and long-term care insurance in the Americas, the United Kingdom and Asia.

Individual savings & retirement products

'Individual savings & retirement products' includes products with no or insignificant longevity risk, primarily fixed and variable annuity products sold in the Americas. These products are mainly in the accumulation phase, but also include immediate and pay-out annuities. This line of business also includes the retail mutual fund business in the Americas, and the variable annuity businesses in Europe and Japan.

Pensions

'Pensions' includes both individual and group pensions as well as 401(k) andsimilar products, typically sponsored by, or obtained via, an employer. Thisline of business covers products in the accumulation phase as well as in thepay-out phase. Also included are pension products sold in the Americas, theNetherlands, the United Kingdom, as well as AEGON's pension business in Central& Eastern Europe.Life reinsurance'Life Reinsurance' includes business assumed by AEGON's subsidiary TransamericaReinsurance and is reported within the Americas segment. No changes have beenmade to what was previously reported in this line.

Distribution

Distribution includes commissions earned by independent financial advisors inthe Netherlands and the United Kingdom. No changes have been made to what waspreviously reported in this line.

Non-life

Non-life includes General insurance and Health insurance. General insuranceincludes mainly automotive insurance, liability insurance, household insuranceand fire protection. General insurance is sold in the Netherlands and Hungary.Health insurance is sold in the Netherlands and Spain.

Asset management

Earnings from AEGON's newly-formed global asset management organization will be reported separately under this line, which covers both services provided to AEGON's life insurance operations and to third parties.

Interest charges and other

'Interest charges and other' includes funding interest expenses and holding expenses. No changes have been made to what was previously reported in this line.

Share in underlying earnings before tax of associates

AEGON's share in underlying earnings before tax of associates are reported under this separate line and mainly cover AEGON's partnerships with La Mondiale Participations in France, CAM in Spain, Religare in India, and the Latin American partnerships with Argos in Mexico and Mongeral in Brazil.

About AEGON

As an international life insurance, pension and investment company based in

The Hague, AEGON has businesses in over twenty markets in the Americas,

Europe and Asia. AEGON companies employ approximately 28,000 people

and have more than 40 million customers across the globe.

Key figures - EUR Full year Full year 2009 2008 Underlying earnings before 1.2 billion 1.2 billiontax New life sales 2.1 billion 2.6 billion Gross deposits (excl. 28 billion 35 billionrun-off) Revenue generating 361 billion 332 billioninvestments (end of period) Contact information

Media relations: Greg Tucker

+31(0)70 344 8956

gcc-ir@aegon.com

Investor relations: Gerbrand Nijman

+31 (0)70 344 8305

877 548 9668 - toll free USA only

ir@aegon.com

Forward-looking statements

The statements contained in this press release that are not historical factsare forward-looking statements as defined in the US Private SecuritiesLitigation Reform Act of 1995. The following are words that identify suchforward-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 asthey relate to our company. These statements are not guarantees of futureperformance and involve risks, uncertainties and assumptions that are difficultto predict. We undertake no obligation to publicly update or revise anyforward-looking statements. Readers are cautioned not to place undue relianceon these forward-looking statements, which merely reflect company expectationsat the time of writing. Actual results may differ materially from expectationsconveyed in forward-looking statements due to changes caused by various risksand uncertainties. Such risks and uncertainties include but are not limited tothe following:

* Changes in general economic conditions, particularly in the United States,

the Netherlands and the United Kingdom; * Changes in the performance of financial markets, including emerging markets, such as with regard to: * The frequency and severity of defaults by issuers in our fixed income investment portfolios; and

* The effects of corporate bankruptcies and/or accounting restatements on the

financial markets and the resulting decline in the value of equity and debt

securities we hold; * The frequency and severity of insured loss events;

* Changes affecting mortality, morbidity and other factors that may impact

the profitability of our insurance products; * Changes affecting interest rate levels and continuing low or rapidly changing interest rate levels;

* Changes affecting currency exchange rates, in particular the EUR/USD and

EUR/GBP exchange rates;

* Increasing levels of competition in the United States, the Netherlands, the

United Kingdom and emerging markets; * Changes in laws and regulations, particularly those affecting our operations, the products we sell, and the attractiveness of certain products to our consumers;

* Regulatory changes relating to the insurance industry in the jurisdictions

in which we operate; * Acts of God, acts of terrorism, acts of war and pandemics;

* Effects of deliberations of the European Commission regarding the aid we

received from the Dutch State in December 2008; * Changes in the policies of central banks and/or governments; * Lowering of one or more of our debt ratings issued by recognized rating

organizations and the adverse impact such action may have on our ability to

raise capital and on our liquidity and financial condition;

* Lowering of one or more of insurer financial strength ratings of our

insurance subsidiaries and the adverse impact such action may have on the

premium writings, policy retention, profitability of its insurance subsidiaries and liquidity; * The effect of the European Union's Solvency II requirements and other

regulations in other jurisdictions affecting the capital we are required to

maintain;

* Litigation or regulatory action that could require us to pay significant

damages or change the way we do business; * Customer responsiveness to both new products and distribution channels;

* Competitive, legal, regulatory, or tax changes that affect the distribution

cost of or demand for our products; * The impact of acquisitions and divestitures, restructurings, product withdrawals and other unusual items, including our ability to integrate acquisitions and to obtain the anticipated results and synergies from acquisitions; * Our failure to achieve anticipated levels of earnings or operational efficiencies as well as other cost saving initiatives; and

* The impact our adoption of the International Financial Reporting Standards

may have on our reported financial results and financial condition.

Further details of potential risks and uncertainties affecting the company aredescribed in the company's filings with Euronext Amsterdam and the USSecurities 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 expresslydisclaims any obligation or undertaking to release publicly any updates orrevisions to any forward-looking statements contained herein to reflect anychange in the company's expectations with regard thereto or any change inevents, conditions or circumstances on which any such statement is based.

END