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

Net income increases to EUR 910 million, reflecting better result on fair value items and lower Other charges

• Underlying earnings before tax decrease by 5% to EUR 963 million due to impacts from lower interest rates in the Americas, and a change in the recognition of interest expenses related to debt refinancing. Earnings growth in other regions is from favorable claims experience and business growth
• Fair value gains of EUR 168 million, driven by positive real estate revaluations in the Netherlands and the US
• Realized gains on investments of EUR 131 million, mostly in the US
• Other charges of EUR 188 million relate mainly to model and assumption changes, restructuring charges, and IFRS 9 / 17 project costs
• Net income of EUR 910 million leads to improvement of the gross financial leverage ratio to 28.5%
• Return on equity of 9.5% in the second half of 2019

Elevated net outflows due to US Retirement Plans; insurance sales growth in key focus areas

• Gross deposits increased by 38% to EUR 80 billion, mainly driven by Aegon Asset Management
• Net outflows of EUR 22.5 billion, as a result of contract discontinuances in US Retirement Plans and outflows in the US annuity businesses, partly offset by continued external third-party net inflows in Asset Management
• New life sales increase by 15% to EUR 456 million following business growth in Asia, and higher pension sales in the Netherlands
• Accident & Health insurance sales are up by 19% to EUR 113 million, mainly driven by a large disability contract win in the Americas
• Property & casualty new premium production up by 6% to EUR 64 million, driven by business growth in Spain

Increased dividend based on strong capital position and normalized capital generation

• Proposed final 2019 dividend per share of EUR 0.16; full-year dividend increases by 7% compared to 2018
• Solvency II ratio above the target zone at 201%. The 4%-points increase in the second half of 2019 is mainly from management actions, including longevity reinsurance in the Netherlands, which are partly offset by adverse impacts of assumption changes. The Solvency II ratio of Aegon the Netherlands increased to 171%
• Capital generation of EUR 1,183 million, including favorable one-time items of EUR 304 million and positive market impacts of EUR 24 million. Normalized capital generation after holding expenses of EUR 855 million
• Holding excess cash at EUR 1.2 billion

Statement of Alex Wynaendts, CEO

“In the second half of 2019 we continued to operate in a challenging environment. Our underlying earnings were impacted by low interest rates while we experienced net outflows in our US retirement and annuity businesses. As a result we achieved a return on equity of 9.5%, below our target of 10%. However, we increased our capital generation which, combined with a number of management actions, enabled us to maintain a strong capital position. This allows us to announce a final dividend of 16 eurocents, increasing our full-year dividend by 7%.

We continue to execute on our strategy, simplifying Aegon’s structure and becoming more proactive in managing our businesses. We have accelerated the release of capital from our mature businesses in the Netherlands by insuring the longevity risk associated with 12 billion euro of liabilities under Solvency II. Also, we completed the sale of our stake in our Japanese joint ventures with Sony Life in early 2020. In our growth businesses, we completed the Cofunds integration, thereby achieving the targeted expense savings and confirming our position as largest player in the UK platform market. Commercial momentum has improved with an increase in Life and Accident & Health sales, and higher gross deposits.

As a major investor, we also take our responsibility towards society, and we combine our promise of a secure and healthy financial future for our customers with caring about the environment. Our updated Responsible Investment Policy expands the criteria for excluding companies with coal-related activities from our investments.”

Note: All comparisons in this release are against 2H 2018, unless stated otherwise

Strategic highlights

• Drive for Growth: United Kingdom delivers on run-rate savings from Cofunds integration, and Aegon Asset Management organizationally realigns to focus on growth
• Scale-up for Future: Insurance joint venture in China with high sales leveraging e-commerce partnership
• Manage for Value: Successful longevity reinsurance deal contributes to restoring dividend paying capacity of Aegon the Netherlands

Aegon’s strategy

Aegon’s purpose – to help people achieve a lifetime of financial security – forms the basis of the company’s strategy. The central focus of the strategy is to further transform Aegon to a customer needs-driven company. This means serving diverse and evolving needs across the customer life cycle by being a trusted partner for financial solutions that are relevant, simple, rewarding, and convenient. Aegon aims to develop long-term customer relationships by providing guidance and advice, and identifying additional financial security needs at every stage of customers’ lives.

In the second half of 2019, we continued focusing on execution of our strategy. The company continues to simplify its business while focusing on sustainable growth in sales and capital generation. By developing long-term relationships with Aegon’s large customer base, and further improving customer engagement, the company strives for profitable organic growth. Active and structured portfolio management enables Aegon to create value for all its stakeholders including shareholders, business partners and customers. Sustainably growing capital generation is the basis of being able to provide shareholders with attractive returns, now and in the future.

Aegon groups its businesses into three distinct categories – Drive for Growth, Scale-up for Future, and Manage for Value:

• The vast majority of Aegon’s investments are directed to multi-product, digitally‑enabled and relationship-based Drive for Growth businesses which are at the core of the strategy and will drive future capital generation.
• Scale-up for Future businesses are aimed at capturing meaningful new opportunities in a systematic way.
• Manage for Value category consists of at-scale businesses, which are mostly spread-based, single-product relationships which are managed for value while keeping customers’ interests at heart.

All units within the Asian and Southern and Eastern European regions are positioned in the Drive for Growth and Scale-up for Future categories. A natural next step was to change the way the group is organized. To manage these businesses more efficiently, Aegon has announced the creation of Aegon International as of January 1, 2020. This brings Aegon’s operations in Asia and Southern and Eastern Europe under a single leadership structure. The objective of this new division is to accelerate growth and value creation by further leveraging cross-border synergies through the development of new business models and realizing operational efficiencies.

On December 12, 2019 Aegon hosted an Analyst & Investor webinar that highlighted how the company is particularly well-positioned to capture growth opportunities in Brazil, Spain and Asia, as well as through its online banking business in the Netherlands. The businesses featured in the webinar, which are predominantly in the Scale-up for Future category, are focused on innovative and easy-to-use solutions and services that customers need in a fast-changing world. A replay of the webinar is available on Aegon.com.

Aegon remains committed to doing business in a responsible way by contributing to smart financial planning, promoting healthy lifestyles, and providing relevant solutions at every stage of the lives of its customers. Furthermore, the company takes a thoughtful approach to secure retirement and healthy aging in society, and aims to make a lasting contribution to a healthy environment through investments and active ownership. Aegon invests, where it can, to bring social benefits to the fore and contribute to a healthier environment. To support this approach, Aegon has put in place a new Group Responsible Investment policy. The new policy is effective from January 1, 2020 and as a result new investments in large mining and utility companies that are expanding their coal-related operations have been ceased within Aegon.

In order to execute our strategy successfully, employees are Aegon’s prime assets. A continuous feedback loop is in place, exemplified by the ninth consecutive global employee survey. The 2019 survey was completed by over 86% of all Aegon employees worldwide, and showed improvement in overall engagement, which increased by 2 points to 67 out of a maximum 100 points. The improvement in engagement over the last year demonstrates Aegon’s ongoing work to become the most preferred employer in the sector, which is enabling Aegon to attract and develop the talent required to best serve the needs of its customers.

Americas

Transamerica is experiencing a challenging economic and commercial environment, as underscored by net outflows across the business, especially in Retirement Plans. Low interest rates put pressure on business margins and drive an industry shift to more fee based businesses, further increasing competition in an already crowded market. Responsiveness to customers and distribution partners is key, and Transamerica is actively addressing previous service issues to improve retention and accelerate growth. In the second half of 2019, Transamerica’s continued focus on customer-centricity has led to improvements in early indicators for future growth, encouraging commercial momentum in certain focus areas and operational improvements.

Workplace Solutions

Transamerica has invested in service and digital capabilities focused on improving the customer experience and increasing retention in Workplace Solutions. These investments are leading to higher customer satisfaction and are expected to stem plan sponsor withdrawals. Touchpoint NPS (tNPS) is a vital indicator of a customer’s thoughts about the level of service that they are receiving. Retirement service scores have seen a significant improvement and are now in the 50s, amongst the leaders based on benchmarking data of the investment industry. This is a key factor in driving written sales of Retirement Plans to an increase of 33% over prior year results.

Retention is critical in competitive businesses, and investments in customer service and operations are beginning to show up in leading indicators. The number of current plan sponsors that are initiating requests for proposal (RFPs) has fallen by 50% since 2018, pointing to a better outlook for contract discontinuances. RFP activity can be an early indicator of future retention because of the six to eighteen months it can take to change providers. At the same time, participant withdrawals are expected to remain at the higher levels we have seen in the past years, reflecting the increasing percentage of the American population in retirement.

Transamerica’s Advice Center is helping customers make financial decisions around their retirement, which allows the company to strengthen customer relationships and retain the assets within Transamerica. Over the last year, deposits to Individual Retirement Accounts (IRAs) through the Advice Center increased almost 40% to USD 1.4 billion, and the Advice Center recently reached USD 5 billion in IRA assets. Consolidation of assets from other sources into Transamerica retirement plans continues to grow supported by call center referrals and retirement planning counselor engagements, and in 2019, these deposits grew by over 50% to USD 2.4 billion. In addition, Transamerica offers the Managed Advice service to 100% of the plans in the large market along with a growing number of mid-market plans adopting it as well. Managed Advice has had a continuous increase in participants and assets under management since the end of 2018.

The SECURE Act was passed in December 2019, representing the most significant legislation on retirement security in over a decade. It will have significant relevance to Transamerica’s Retirement Plans business. The SECURE Act was championed by Transamerica, which provided significant thought leadership and advocacy in enacting the legislation. Several of the provisions have been long-time priorities for Transamerica, including a provision which allows unaffiliated businesses to form multiple employer plans (i.e. open multiple employer plans). The SECURE Act makes it easier for plan sponsors to fulfill their fiduciary responsibilities by choosing insurance companies to provide annuities as either in-plan investment or a distribution option.

Individual Solutions

In Individual Solutions, continued progress towards operational excellence is underway. TCS’s performance against service level agreements continues to improve while focus remains on enhancements to support customer and advisor experience and growth. The launch of the first new product on TCS’s administrative platform (BaNCS) is now planned in the first half of 2020.

Nearly 200 Transamerica employees were transferred to LTCG as part of the partnership announced in March 2019, which established LTCG as a partner in the administration of long-term care. Experience from the TCS transition was applied, which helped the transition to go smoothly. As with the TCS arrangement, these transferred employees will continue to support Transamerica customers, ensuring service continuity. LTCG’s advanced data analytics, actuarial and risk management capabilities are aligned with providing an excellent experience for customers.

Fixed Indexed Annuity product availability has been extended into California, a major market for Transamerica, with an expectation that this will drive sales opportunity in 2020. Gross deposits in the second half of 2019 for fixed indexed annuity sales grew by 59% to USD 206 million, which was helped by a new distribution relationship which is expected to continue to add to sales momentum going forward.

Enhancements to Transamerica’s variable annuity product suite earlier in 2019 are yielding tangible results. Transamerica’s US variable annuity market share improved to 4.6% per end of December, based on LIMRA’s estimate of industry sales. This is a sizeable increase from the 3.2% market share in December 2018. In 2019, Transamerica made the strategic decision to protect its Variable Annuity distribution franchise, and accepted negative market consistent value of new business in the short term. Pricing actions were implemented in December, and Transamerica will take steps to further improve profitability while maintaining a competitive franchise.

Europe

In Europe, Aegon’s focus is on growing its modern digitally-enabled businesses organically, and reinforcing its commitments to reallocate capital to future-proof businesses.

In the Netherlands, Aegon announced a longevity reinsurance deal, reinsuring about a quarter of its longevity exposure. This has reduced required capital and improved Aegon’s capital position. The reinsurance agreement with Canada Life Reinsurance, provides full protection against the longevity risk associated with EUR 12 billion of best-estimate liabilities under Solvency II. The longevity reinsurance agreement has no impact on the services and guarantees that Aegon provides to its policyholders, and is in line with Aegon’s strategy to release capital from mature, spread-based businesses. This supported Aegon the Netherlands’ move back in its Solvency II target zone. Aegon the Netherlands has remitted EUR 100 million to the Holding in February 2020.

As of January 1, 2020, employees of Aegon the Netherlands began accruing pension benefits in a defined contribution plan instead of the current defined benefit plan, in line with market trends. All entitlements accrued before that date will remain unchanged and are guaranteed. This was agreed with the trade unions and their respective members, and received a positive advice from the Works Council. The change of pension scheme protects Aegon’s capital position and reduces volatility in its pension expenses.

To improve insights into customers and better enable them to make decisions regarding their financial futures, the Netherlands organization has transitioned to an agile way of working. As a consequence, the organization is expected to become more effective and efficient in service delivery. In the second half of 2019, a new organizational structure was adopted which is fully centered around value streams, ensuring nimbleness and customer focus. As a result of the transition, changes to the senior management team were announced in January 2020.

Challenging competitive conditions in the Dutch individual life business have led to management deciding to stop underwriting new individual life policies effective March 2020. This includes term life and individual annuities for which new life sales totaled EUR 12 million in 2019. Aegon will continue to provide pension and non-life insurance products in the Netherlands.

In the United Kingdom, Aegon appointed Mike Holliday-Williams as the new CEO. This appointment signals Aegon’s continuing commitment to build on the strong foundation of the United Kingdom business. In the past years, the business has been successfully modernized, transformed and repositioned. From this solid base, the aim is to grow the United Kingdom business further by focusing even more on customer centricity.

Following the successful Cofunds integration, Aegon has realized its GBP 60 million in annualized expense savings target as Cofunds’ legacy systems were decommissioned, an office was closed, and other operational efficiencies were realized. Aegon expects some residual restructuring expenses into 2020 related to further expense savings and additional economies of scale.

In December 2018, Aegon announced the expansion of its partnership with Banco Santander in Portugal. The transaction has been successfully closed in the second half of 2019 for a consideration of EUR 20 million. Under the transaction, the Portuguese joint ventures with Santander are expanded to the life and non-life new business in the former Banco Popular network, as well as the in-force business owned by Banco Popular’s insurance subsidiaries. Since October 2018, the new business has been recorded in Aegon’s Portuguese joint ventures, and in September and October 2019 the in-force business has also been transferred.

Asia

Aegon has successfully completed the sale of its 50% stake in the Japanese variable annuity joint ventures to partner Sony Life in January 2020. Aegon announced the agreement to sell its 50% stake in the variable annuity joint ventures in May 2019. The total cash proceeds are EUR 153 million (JPY 18.75 billion). The book gain under IFRS amounted to EUR 51 million and will be booked in the first half of 2020.

In China, the Aegon THTF insurance joint venture is partnering with a major e-commerce player to offer term life products on its e-commerce platforms. The first product launch in October led to sales of approximately USD 15 million, or about 45% of total Aegon THTF sales in the fourth quarter of 2019. The success and profitability of this product launch demonstrates the potential of this e-commerce model.

Aegon Life in India secured a major e-commerce partnership with Flipkart during the second half of the year, its third after signing distribution agreements with MobiKwik and PayTM in the first half of 2019. Aegon is the sole life insurance partner on the Flipkart platform, with targeted launches for group term and retail products in 2020.

Asset Management

Aegon Asset Management announced that it will integrate its European and US businesses. This important step leverages its extensive global resources to enhance customer outcomes and compete more aggressively with other major global asset managers.

Contacts

Media relations

Dick Schiethart

+31 (0) 70 344 8821

gcc@aegon.com

Investor relations

Jan Willem Weidema

+31 (0) 70 344 8028

ir@aegon.com

Conference call including Q&A (9:00 a.m. CET)

Audio webcast on aegon.com

United States: +1 720 543 0206

United Kingdom: +44 (0)330 336 9411

The Netherlands: +31 (0) 20 703 8261

Passcode: 1180188

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