Aegon to grow capital generation and dividends

THE HAGUE, Netherlands–(BUSINESS WIRE)–Regulatory News:

Aegon has set new medium-term financial targets with a focus on
growing capital generation and dividends. By safeguarding a strong
capital position, Aegon will continue to help millions of people to
achieve a lifetime of financial security.

For the years 2019-2021, Aegon aims to achieve the following Group
financial targets:

  • Capital generation of EUR 4.1 billion cumulatively; excluding market
    impacts and one-time items, and after holding funding and operating
    expenses
  • Dividend pay-out to shareholders between 45% and 55% of capital
    generation1)
  • Return on shareholders’ equity of more than 10% on an annual basis

For 2019, Aegon expects its units to upstream EUR 1.5 billion in
dividends to the holding, including divestment proceeds. This confirms
the fungibility of the capital generated and supports a sustainable
return to shareholders.

The current capital framework and related target ranges remain unchanged
for the years 2019-2021:

  • The Solvency II ratio target range remains at 150% to 200%; the 2018
    Solvency II ratio amounted to 211%
  • Holding excess cash to remain in target zone of EUR 1.0 to 1.5
    billion; year-end 2018 level was EUR 1.3 billion
  • Gross financial leverage ratio targeted to be between 26% and 30%;
    year-end 2018 level was 29.2%
  • Maintain a capitalization required for a financial strength AA- rating

As of the second half of 2018, Aegon is applying an adjusted
capitalization definition. To align closer to definitions used by peers
and rating agencies, Aegon has retrospectively changed its internal
definition of adjusted shareholders’ equity used in calculating return
on equity for the group, return on capital for its units, and the gross
financial leverage ratio. Shareholders’ equity will no longer be
adjusted for the remeasurement of defined benefit plans. As a result,
the gross financial leverage ratio increases by 2.2%-point compared with
the old definition. This means that maintaining a 26-30% gross financial
leverage ratio effectively implies a more conservative target.

Statement of Alex Wynaendts, CEO

“The new set of financial targets we have announced today is building
on the successes we have achieved during the previous three-year target
period. Going forward, our focus remains on strong capital generation
and providing shareholders with attractive returns.

“Our capital generation is backed by a proactive approach to managing
our portfolio of businesses, which we have now grouped into three
distinct categories – “Manage for Value”, “Drive for Growth”, and “Scale
up for Future” businesses. The first category consists of at-scale
businesses, which are mostly spread-based, and we manage these for value
in a sustainable way. The vast majority of our investments will be
directed to “drive for growth” businesses which are at the core of our
strategy as they drive future capital generation. Finally, the third
part of our portfolio – “Scale up for Future businesses” – is aiming at
capturing meaningful new opportunities.

“This approach allows us to grow profitably, and to create value for
all our stakeholders including our customers and shareholders. In this
way, we will fulfill our purpose to help people achieve a lifetime of
financial security.”

1) Assuming markets move in line with management’s best
estimate, no material regulatory changes and no material one-time items
other than already announced restructuring programs

About Aegon

Aegon’s roots go back almost 200 years – to the first half of the
nineteenth century. Since then, Aegon has grown into an international
company, with businesses in more than 20 countries in the Americas,
Europe and Asia. Today, Aegon is one of the world’s leading financial
services organizations, providing life insurance, pensions and asset
management. Aegon’s purpose is to help people achieve a lifetime of
financial security. More information on aegon.com.

Disclaimers

Cautionary note regarding non-IFRS-EU measures

This document includes the following non-IFRS-EU financial measures:
underlying earnings before tax, income tax, income before tax, market
consistent value of new business and return on equity. These non-IFRS-EU
measures are calculated by consolidating on a proportionate basis
Aegon’s joint ventures and associated companies. Market consistent value
of new business is not based on IFRS-EU, which are used to report
Aegon’s primary financial statements and should not be viewed as a
substitute for IFRS-EU financial measures. Aegon may define and
calculate market consistent value of new business differently than other
companies. Return on equity is a ratio using a non-IFRS-EU measure and
is calculated by dividing the net underlying earnings after cost of
leverage by the average shareholders’ equity adjusted for the
revaluation reserve. Aegon believes that these non-IFRS-EU measures,
together with the IFRS-EU information, provide meaningful supplemental
information about the underlying operating results of Aegon’s business
including insight into the financial measures that senior management
uses in managing the business.

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 Asia, and in 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, could, 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 and/or governmental 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 public sector
    securities and the resulting decline in the value of government
    exposure that Aegon holds;
  • Changes in the performance of Aegon’s investment portfolio and decline
    in ratings of Aegon’s counterparties;
  • Consequences of an actual or potential break-up of the European
    monetary union in whole or in part;
  • Consequences of the anticipated exit of the United Kingdom from the
    European Union and potential consequences of other European Union
    countries leaving 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, taxation of
    Aegon companies, 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 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 or both;
  • As Aegon’s operations support complex transactions and are highly
    dependent on the proper functioning of information technology,
    operational risks such as system disruptions or failures, security or
    data privacy breaches, cyberattacks, human error, failure to safeguard
    personally identifiable information, changes in operational practices
    or inadequate controls including with respect to third parties with
    which we do business 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, shareholders’ equity or
    regulatory capital adequacy levels;
  • Aegon’s projected results are highly sensitive to complex mathematical
    models of financial markets, mortality, longevity, and other dynamic
    systems subject to shocks and unpredictable volatility. Should
    assumptions to these models later prove incorrect, or should errors in
    those models escape the controls in place to detect them, future
    performance will vary from projected results;
  • 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 cash
    and leverage ratio management initiatives.

This press release contains information that qualifies, or may qualify,
as inside information within the meaning of Article 7(1) of the EU
Market Abuse Regulation (596/2014). 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.

Contacts

Media relations
Dick Schiethart
+31(0) 70 344 8821
dick.schiethart@aegon.com

Investor relations
Jan Willem Weidema
+31(0) 70 344 8028
janwillem.weidema@aegon.com