In the UK, we have transformed our business into the number one retail investment platform in the market, with over 1.2 million customers. Our main focus over the last year was continuing to integrate Cofunds and BlackRock’s defined contribution business, together with upgrading tens of thousands of customers from our backbook onto our state-of-the-art platform, which increased assets to more than GBP 117 billion.
Adrian Grace (1963, British) CEO of Aegon UK and member of the Management Board of Aegon N.V. Adrian Grace held various roles at GE capital, Sage Group Inc., before joining Barclays Bank as Chief Executive of the Insurance
Businesses in 2007. He joined Aegon UK in 2009, and was appointed CEO of Aegon UK in 2011 and as a member of the
CEO three years later. Mr. Keim was appointed CEO of Aegon the Netherlands and member of Aegon’s Management
He was named President of Aegon Americas in 2009, and became President and CEO of Aegon Americas and a member of Aegon’s Management Board in 2010. Mr. Mullin was appointed
In summary, it is Aegon’s ambition to be regarded as a trusted partner for financial solutions at every stage of life in all its markets. That means being recognized by its customers, business partners, and society as a company that puts the interests of its customers first in all that it does; and being regarded as an employer of choice by employees, engaging and enabling them to succeed. In addition, the Company strives to meet shareholder’s expectations by generating strong returns, earnings and dividends.
Aegon o�ers some products directly to customers, either online or via tied agents. Most, however, are sold through intermediaries (including brokers, agents, banks and financial advisors).
was formed in 1983 through the merger of AGO and Ennia, both of which were successors to insurance companies founded in the 1800s.
Aegon recognizes five main stakeholder groups: �� Customers (individual customers, group and corporate clients); �� Employees (full-time and part-time employees, tied agents, trade unions and other employee representative groups); �� Investors (institutional and retail investors); �� Business partners (distributors, joint venture partners, reinsurers and suppliers of goods and services); �� Wider community (governments, regulators, charities, tax authorities, community groups and other non-governmental organizations, academic and other public institutions).
New technologies and digital transformation Influence and control Aegon has direct control over the way it uses, and invests in, new technologies, but must also respond to the deeper social and economic changes these technologies are bringing.
Risks Uncertainty can put a brake on investment and disrupt financial markets, both of which may impact Aegon’s overall financial performance. During 2017, Aegon saw increased political uncertainty in a number of its markets, including Spain, Turkey, the UK and the US.
(which may alter the Company’s relationship with certain customers and distributors).
Payments to suppliers of goods & services €1.4 billion €1.3billion €1.3 billion Financial
Tax collected on behalf of governments €2.2 billion €2.2 billion NM Social
Aegon’s local businesses. By the end of 2017, 70% of employees had attended a Future Fit workshop.
The table also includes the non-IFRS-EU financial measure: net underlying earnings. This is the after-tax equivalent of underlying earnings before tax. The reconciliation of net underlying earnings to the most comparable IFRS-EU measure is presented in the table below. Aegon believes that these non-IFRS-EU measures provides meaningful supplemental information about the underlying operating results of Aegon’s businesses, including insight into the financial measures that senior management uses in managing the businesses.
Total life insurance gross premiums 7,437 1,857 9,603 411 208 12,079 983 - (1) 20,498 (546) 19,952
Underlying earnings before tax Aegon’s underlying earnings before tax increased compared with 2016 to EUR 2,103 million in 2017. This was mainly driven by expense reductions, an improvement in claims experience in the Americas, and higher fee revenue resulting from favorable equity market performance.
�� In Europe, underlying earnings before tax in 2017 increased by 8% compared with 2016 to EUR 707 million. This was mainly driven by higher fee income in the United Kingdom compared with 2016 from favorable equity markets and net inflows. In addition, the inclusion of Cofunds in 2017 led to higher underlying earnings before tax compared with 2016. �� In Asia, underlying earnings before tax increased in 2017 compared with 2016 to EUR 49 million as a result of increased underlying earnings before tax from the High Net
Impairment charges Net impairments of EUR 39 million in 2017 primarily related to a single commercial mortgage loan in the United States and loan loss provisions in connection to growing consumer loan origination in the Netherlands.
Management and the acquisition of Cofunds. Net outflows amounted to EUR 17.1 billion as inflows in Asset Management and the United Kingdom were more than offset by contract discontinuances from the business acquired from Mercer.
These outflows were in line with the guidance provided in 2017, and are driven by the conversion of customers to the
In 2017, the Mexican shareholders of Seguros Argos agreed to purchase Aegon’s shares for an undisclosed amount and end the Afore Argos joint venture. This was a mutual decision that allows both parties to pursue new opportunities and new relationships in Mexico.
provides advice and guidance to individuals to meet their protection and investment needs. With over 54,000 associates
At any time, the policy owner is able to see the maximum monthly deduction rate that can be charged. Some versions of this product have 'secondary guarantees.' These maintain life insurance coverage when cash value is insufficient, as long as the customer pays a specified minimum premium each year.
Supplemental health insurance Supplemental health insurance products include accidental death and dismemberment, accidental injury, cancer, critical illness, disability, hospital indemnity, Medicare Supplement,
Bancoob is a private commercial bank owned by the credit cooperative entities affiliated with the Sicoob system.
Production for the Netherlands Gross deposits increased by 21% compared with 2016 to EUR 8.1 billion in 2017, mainly driven by the growth of Knab,
are subject to prudential supervision of the DNB: �� Aegon Levensverzekering N.V.; �� Aegon Schadeverzekering N.V.; �� Aegon Spaarkas N.V.; and �� Optas Pensioenen N.V.
'fund supermarket' adding approximately GBP 80 billion of assets, predominantly in ISAs and GIAs, complementing Aegon
BlackRock's main focus in this market is on Master Trust products, defined benefit target, investment-only business, and unbundled defined contribution pension schemes.
Retiready is focused on existing Aegon UK customers that no longer have an advisor. The majority of customers receive the service having been 'upgraded' from Aegon UK's existing business, thereby allowing long-standing customers to benefit from the advantages of a modern digital pension. Retiready customers have access to a number of tools to help them better engage with and manage their retirement savings.
Overview of business Lines Reporting for Aegon UK is organized along two business lines: 'Life' and 'Pensions'. 'Life' comprises protection products sold to individuals and small- to medium-sized companies
The Digital Solutions business is responsible for Aegon UK's new digital platform propositions sold through Retail Advisor and Workplace channels, together with the protection lines.
Solvency II Under Solvency II, life insurance companies are required to maintain certain levels of shareholders' equity in accordance with EU directives, and have to hold the level of capital required to withstand a 1 in 200 shock on a 1-year value at risk basis.
The internal model was approved on December 14, 2015, by the
As of December 31, 2017, Aegon managed the savings of 3.1 million pension fund members in Central & Eastern Europe.
Aegon’s EU-domiciled entities in Central & Eastern Europe use the Standard Formula to calculate the solvency position of their insurance activities. The activities in Turkey have been included through Deduction & Aggregation on a Solvency II Standard
Aegon Spain and Banco Santander Since June 4, 2013, Aegon Spain and Banco Santander S.A. have partnered to distribute a number of insurance products in Spain.
USD 39 million in 2016 compared with USD 27 million in 2015 mainly a result of the increase in ownership from 26%
Production New life sales decreased by 26% in 2016 to USD 142 million compared with 2015.
Aegon THTF also offers non-life products (primarily consisting of short-term accident and short-term health products)
‘circulars’, rules that provide additional clarify and information about claims processing, point of sale, report on persistency rate and renewal rate, investment regulation, and the implementation of Indian accounting standards.
Production Gross inflows in other third-party increased by 32% in 2017 to EUR 61.3 billion compared with 2016. This was mainly the result of higher gross flows in Strategic partnerships in 2017 compared with 2016, and higher gross flows in the US and the Netherlands.
Board are appointed by Aegon N.V.. The Risk Advisory Committee and Remuneration Committee support Aegon’s oversight of Aegon Asset Management.
Competition Aegon Asset Management competes with other asset management companies to acquire business from openarchitecture Aegon insurance units and third parties.
Regulation and supervision Regulation of asset management companies in general differs to that of insurers. Aegon Asset Management's global holding company, Aegon Asset Management Holding B.V., is regulated by the Dutch Central Bank (DNB) as a financial holding company according to the Dutch Financial Supervision Act (Wft). Local operating entities are regulated by their local regulators, most notably the Dutch Authority for the Financial Markets (AFM)
B.V.) have decided in principle to pay external research costs by their own means.
The Enterprise Risk Management (ERM) framework includes a number of risk policies that govern ALM strategies, such as the Investment and Counterparty Risk Policy (ICRP), the
Blue Square Re is a global reinsurer 100% owned by Aegon N.V.
In terms of Aegon’s purpose statement, risk taking should be instrumental to helping people achieve a lifetime of financial security. The competence with which Aegon is able to manage the risk is assessed and Aegon’s risk preferences are formulated, taking into account Aegon’s risk capacity. The risk preferences eventually lead to a targeted risk profile that reflects the risks
Aegon’s statutory executive body, the Management Board provides vital support and expertise in safeguarding
Board, and regional and business unit boards in ensuring that the Company reviews, assesses, understands and manages its risk profile. Through oversight, the Risk Management function ensures the group-wide risk profile is managed in line with
under the previous methodology. This methodology is consistent with EIOPA’s guidance on group solvency calculation in the context of equivalence, and in line with methods applied by other
This ratio includes the US Life insurance and reinsurance entities as well as non-regulated US entities and US holding companies.
The Solvency II capital ratio of the Group and Aegon the
Aegon United Kingdom 145% - 185% Solvency II Capital Ratio 1 Capitalization target ranges follow the revised capital management policy as of 2Q 2017
contribution of the Aegon US insurance and reinsurance entities under D&A, to the Group. This methodology is consistent with the European Insurance and Occupational Pensions Authority’s
Insurance and banking companies, together with a number of the investment undertakings in the Group, are required to maintain a minimum solvency margin based on local requirements. In addition, some parts of the Group are subject to prudential requirements on a consolidated basis, including capital and reporting requirements.
In addition, it is a requirement to publish a Solvency and
IAIS guidelines. On November 2, 2017, the IAIS has announced its members have reached an agreement on a unified path to convergence on the development of International Capital
On February 15, 2018, Aegon announced that Dirk Verbeek, member of the Supervisory Board, decided to step down after 10 years of service, at the General Meeting of Shareholders on May 18, 2018. The Supervisory Board is in the process of selecting new candidates for appointment and will propose any such candidate in due course for approval to the Company's shareholders.
Executive Officer (CEO) and Chairman of the Executive Board, and Matthew J. Rider, Chief Financial Officer (CFO). Matthew J.
Ben van der Veer 6/7 4/4 6/6 - - 6/6 1/1
The Audit Committee Composition On December 31, 2017, the composition of the Audit Committee was as follows: �� Ben van der Veer (chair); �� William L. Connelly; �� Mark A. Ellman; �� Robert W. Dineen; �� Corien M. Wortmann-Kool; and �� Dona D. Young.
Mr. Noteboom is also a member of the Supervisory Board of Royal Ahold Delhaize N.V., Wolters Kluwer N.V. and
The Wbfo 2015 has a provision that makes it possible to apply a variable compensation maximum that is aligned with the European CRD IV compensation ratio (100% of fixed compensation at maximum level). This has been specifically created for all people working for the corporate office of companies with a strong international nature. In 2017,
For compensation of staff outside Europe, the Company obtained shareholder approval at the Annual General Meeting of Shareholders of May 20, 2016, to pay a maximum of 200%
In the following sections more detailed information is provided on the compensation practice for the Supervisory Board and the
In determining the expected level of pay for each Executive Board member, scenarios have been considered in which the minimum, maximum and at target pay was assessed. In these scenario’s the share component in the variable pay element has been assessed at the plan year’s grant price.
Remuneration policy, the Company is able to reward the members of the Executive Board in line with the Aegon Group
Implementation of this authority is on the basis of criteria such as: �� The outcome of a re-assessment of the performance against the original financial performance indicators; �� A significant downturn in the Company’s financial performance; �� Evidence of misbehavior or serious error by the participant; �� A significant failure in risk management; and �� Significant changes in the Company’s economic or regulatory capital base.
Fixed compensation Mr. Wynaendts’ fixed compensation remained unchanged in 2017 at EUR 1,269,478. The annual fixed compensation of Aegon’s CFO was agreed at EUR 900,000, and remained unchanged in 2017.
Aegon’s largest shareholder is Vereniging Aegon, a Dutch association with a special purpose to protect the broader interests of the Company and its stakeholders.
Report at the Annual General Meetings of Shareholders in the year of vesting of these shares.
Controls and procedures Disclosure controls and procedures At the end of the period covered by this Annual Report,
The effectiveness of internal control over financial reporting as of December 31, 2017, was audited by PricewaterhouseCoopers
(“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
Consolidated financial statements of Aegon N.V. Exchange rates Consolidated financial statements of Aegon N.V. Consolidated financial statements of Aegon N.V. Exchange rates
Share in profit / (loss) of joint ventures 161 137 142
The consolidated financial statements have been prepared in accordance with the historical cost convention as modified by the revaluation of investment properties and those financial instruments (including derivatives) and financial liabilities that have been measured at fair value. Information on the standards and interpretations that were adopted in 2017 is provided below in note 2.1.1 Adoption of new IFRS-EU accounting standards. The consolidated financial statements are presented in euro and all values are rounded to the nearest million unless otherwise stated. The consequence is that the rounded amounts may not add up to the rounded total in all cases. All ratios and variances are calculated using the underlying amount rather than the rounded amount. Certain amounts in prior years may have been reclassified to conform to the current year presentation. These reclassifications had no effect on net income, shareholders' equity or earnings per share.
Notes to the consolidated financial statements Notes to the consolidated financial statements Notes to the consolidated financial statements
IFRS 9 Financial instruments, including the separate amendment applying IFRS 9 Financial instruments with IFRS 4 Insurance contracts
published the final version of the IFRS 17 Insurance Contracts standard. Prior to its finalization, the IASB issued an amendment to IFRS
Structured entities that are not consolidated include general account investments in non-affiliated structured entities that are used for investment purposes.
equity, as the services are rendered. During this period the cumulative expense recognized at the reporting date reflects management’s best estimate of the number of shares expected to vest ultimately. For cash settled components (such as net settled component of long-term share-based plans) a liability will be recognized using the fair value of the equity settled award based on the elapsed portion of the vesting period. For modifications of the terms and conditions of equity-settled plans that result in those plans to be classified as cash-settled plans, the liability is recognized using the fair value measured at the modification date. The liability is remeasured at each reporting date and at the date of settlement, with any changes in fair value recognized in the income statement.
Deferred tax assets and liabilities are reviewed at each reporting period and are measured at tax rates that are expected to apply when the asset is realized or the liability is settled. Since there is no absolute assurance that these assets will ultimately be realized, management reviews Aegon’s deferred tax positions at each reporting period to determine if it is probable that the assets will be realized. These reviews include, among other things, the nature and amount of the taxable income and deductible expenses, the expected timing when certain assets will be used or liabilities will be required to be reported and the reliability of historical profitability of businesses expected to provide future earnings. Furthermore, management considers tax-planning opportunities it can utilize to increase the likelihood that the tax assets will be realized. The carrying amount is not discounted and reflects the
foreign currency, interest rate, credit and equity market risks) that affect the value of the investments, liabilities from products that
Private loans - carried at amortized cost 3,642 79 - - - - - 79 - 3,563
The fair value of Aegon Americas commercial and agricultural mortgage loan portfolio as per December 31, 2017, amounted to EUR 7,132 million (2016: EUR 8,789 million). The loan to value (LTV) amounted to approximately 55% (2016: 54%). Of the portfolio 0.06% (2016: nil) is in delinquency (defined as 60 days in arrears). In 2017, Aegon Americas recognized EUR 19 million impairments (net of recoveries) (2016: nil) on this portfolio. In 2017, Aegon Americas foreclosed upon, or recovered no amount of real estate (2016: EUR 15 million). The 2017 additional impairments associated with these loans at the time of foreclosure amounted to EUR 0.2 million (2016: EUR 2 million).
Group, inc. (AMBAC), and 43% to Assured Guaranty Corporation (AGC) (2016: 37% related to MBIA, 14% to AMBAC, and 39% to AGC).
Residential mortgage-backed securities Aegon Americas, Aegon the Netherlands and Aegon UK hold EUR 3,557 million (December 31, 2016: EUR 4,162 million) of residential mortgage-backed securities available-for-sale (RMBS), of which EUR 2,985 million (December 31, 2016: EUR 3,494 million) is held by Aegon Americas, EUR 556 million (December 31, 2016: EUR 649 million) by Aegon the Netherlands, and EUR 17 million (December 31, 2016: EUR 19 million) by Aegon UK. Residential mortgage-backed securities are securitizations of underlying pools of noncommercial mortgages on real estate. The underlying residential mortgages have varying credit characteristics and are pooled together and sold in tranches. The following table shows the breakdown of Aegon USA's RMBS available-for-sale (AFS) portfolio.
Additionally, Aegon USA has investments in RMBS of EUR 40 million (December 31, 2016: EUR 89 million), which are classified as fair value through profit or loss.
Aegon does not consider the underlying investments to be impaired as of December 31, 2017.
Other income or charges Other income or charges includes the following: �� items which cannot be directly allocated to a specific line of business; �� the impact of assumption and model updates used to support calculations of our liabilities for insurance and investment contracts sold to policyholders and related assets; and �� items that are outside the normal course of business, including restructuring charges.
Brazil, the Netherlands, United Kingdom, Mexico and France are reported on an underlying earnings before tax basis.
Realized gains and (losses) on repurchased debt 10 1 1 2
Total premium income 22,826 23,453 22,925 - Accident and health insurance 2,511 2,609 2,703
Premium income Life insurance includes EUR 5,139 million (2016: EUR 5,255 million) of premiums related to insurance policies upgraded to the retirement platform in the UK.
Included in interest income is EUR 190 million (2016: EUR 230 million; 2015: EUR 223 million) in respect of interest income accrued on impaired financial assets. The interest income on financial assets that are not carried at fair value through profit or loss amounted to EUR 5,056 million (2016: EUR 5,642 million; 2015: EUR 5,951 million).
Financial assets designated at fair value through profit or loss 148 80 115 8 Fee and commission income
Net fair value change on economic hedges where no hedge accounting is applied (63) 969 (598)
Net fair value change on for account of policyholder financial assets at fair value through profit or loss comprise: 2017 2016 2015
Difference due to the effects of: Non-taxable income (155) (128) 46
Movement in foreign currency translation and net foreign investment hedging reserve 76 (39) (52)
19 Earnings per share Basic earnings per share Basic earnings per share is calculated by dividing the net income attributable to owners, after deduction of coupons on perpetual securities and non-cumulative subordinated notes by the weighted average number of common shares, excluding common shares purchased by the Company and held as treasury shares (refer to note 32.1 Share capital – par value and 32.3 Treasury shares respectively).
After taking the interim dividend 2017 of EUR 0.00325 per common share B into account, this will result in a total 2017 dividend of EUR 0.00675 per common share B.
For the purposes of the cash flow statement, cash and cash equivalents comprise the following: Cash and cash equivalents 10,768 11,347 9,594
Analysis of cash flows 2017 compared to 2016 Net cash flows from operating activities
Derivatives for general account Derivatives not designated in a hedge 5,045 6,516 6,407 7,819
Of the derivatives EUR 495 million (2016: EUR 1,030 million) and EUR 949 million (2016: EUR 2,537 million) are current derivative assets and liabilities respectively.
The assets arising from reinsurance contracts related to the exit of a business per December 31, 2017 and 2016 relate, next to the above mentioned divestments, also to the sale of Aegon’s life reinsurance business from Transamerica Reinsurance (TARe) to SCOR, completed on August 9, 2011. The divestment of TARe consists of a series of reinsurance agreements between various statutory insurance entities and SCOR for the US domestic business.
DPAC for insurance contracts and investment contracts with discretionary participation features 9,688 10,882
Of accrued income EUR 1,364 million is current (2016: EUR 1,547 million).
A geographical summary of the cash-generating units to which the goodwill is allocated is as follows: Central & Eastern Europe 34 36
32.3 Treasury shares On the reporting date, Aegon N.V. and its subsidiaries held 65,650,650 (2016: 48,780,045) of its own common shares and 15,345,680
Transfers to disposal groups relates to the Aegon Ireland plc. business which is classified as held for sale per year-end 2017. As a result, the investment contracts for account of policyholders are no longer included in the 2017 ending balance. Refer to note 22 Assets and liabilities held for sale and note 51 Business combinations.
Russell 2000, and the MCSI EAFE index in accordance with Aegon’s exposure) to mitigate the effect of equity market movement on the reinsurance contract and the purchase of interest rate swaps, treasury futures and treasury forwards to mitigate the effect of movements in interest rates on the reinsurance contracts.
The guarantees in the United Kingdom relate to the Aegon Ireland plc. business which is classified as held for sale per year-end 2017 and as a result the guarantees are no longer included in the 2017 ending balance.
2 Balances are included in the insurance liabilities on the face of the statement of financial position; refer to note 36 Insurance contracts. 3 Incurred guarantee benefits mainly comprise the effect of guarantees from new contracts, releases related to expired out-of-the-money guarantees and fair value movements during the reporting year. 4 Account value reflects the liability value of the insurance contracts as a whole. 5 The net amount at risk represents the sum of the differences between the guaranteed and actual amount that is credited to the policyholders. For Individual policies only positive differences are included, for Group pensions contracts carry forwards of negative differences are recognized.
Aegon’s credit spread had a negative impact of EUR 15 million on income before tax (2016: negative impact of EUR 1 million) and a negative impact of EUR 10 million on shareholders’ equity (2016: negative impact of EUR 1 million). The cumulative negative impact of Aegon’s credit spread for borrowings in portfolio at year-end, based on observable market data, on income before tax amounted to EUR 27 million (2016: EUR 12 million).
Fair value of plan assets (3,622) - (3,622) (3,793) - (3,793)
Aegon the Netherlands Aegon Nederland has a number of defined benefit plans and a small number of defined contribution plans. The defined benefit plans are subject to Dutch Pension regulations and governed by the Board of Directors of Aegon Nederland. The Board of Directors has the full power and discretion to administer the plan including developing investment policy and managing assets for the plans (although these assets do not qualify as ‘plan assets’ as defined by IFRS), deciding questions related to eligibility and benefit amounts, and any disputes that may arise from plan participants and for complying with the plan provisions, and legal requirements related to the plan and its operation. Aegon Nederland runs, in principle, full actuarial and investment risk regarding the defined benefit plans. This includes the risks of low interest rates, low returns and increased longevity. A part of this risk can be attributed to plan participants by lowering indexation or by increasing employee contributions.
company level (who have priority in payments over other creditors). Aegon’s assumptions are set by region to reflect differences in the valuation of the guarantee embedded in the insurance contracts.
On March 3, 2015, Aegon completed the sale of its 35% share in La Mondiale Participations following the granting of approval by the
Refer to note 26 Investments in joint ventures for further details on these investments.
and EUR 3.7 million (2016: EUR 3.2 million; 2015: EUR 3.4 million) for pensions. Total IFRS-EU expenses for the members of the
Ben J. Noteboom (as of May 20, 2015) 101,500 109,000 69,250
Movements in the number of treasury common shares B of Aegon N.V. were as follows: Number of shares (thousands) Amount
Where the work was performed by component auditors, we determined the level of involvement we needed to have in the audit work at those units to be able to conclude whether sufficient appropriate audit evidence had been obtained as a basis for our opinion on the consolidated financial statements as a whole. In addition to issuing written instructions to each of the component teams, we developed an oversight strategy for each unit based on its significance and/or risk characteristics to the Group. These strategies included procedures such as regular meetings and discussions with component auditors to challenge and review significant audit matters and judgments within the component team audit files including the review of selected working papers, extensive reporting to the Group team on a quarterly basis and regular site visits to attend closing meetings and/or local board meetings.
We assessed recoverability of DPAC and VOBA through our audit procedures concerning the liability adequacy test as referred to in the valuation of insurance contracts key audit matter above.
No prohibited non-audit services To the best of our knowledge and belief, we have not provided prohibited non-audit services as referred to in Article 5(1) of the
�� Concluding on the appropriateness of management’s use of the going concern basis of accounting, and based on the audit evidence obtained, concluding whether a material uncertainty exists related to events and/or conditions that may cast significant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report and are made in the context of our opinion on the financial statements as a whole. However, future events or conditions may cause the company to cease to continue as a going concern.
In May 2003, Aegon N.V. and Vereniging Aegon amended the option arrangements under the 1983 Amended Merger Agreement so that, in the event of an issuance of shares by Aegon N.V., Vereniging Aegon could purchase as many class B preferred shares as would enable Vereniging Aegon to prevent or correct dilution to below its actual percentage of voting shares, to a maximum of 33%.
A decline in equity markets may adversely affect Aegon’s profitability and shareholders´ equity, sales of savings and investment products, and the amount of assets under management.
The sensitivity of Aegon’s net income and shareholders’ equity to a change in interest rates is provided in the notes to the consolidated statements, note 4 Financial risks, section “Interest rate risk”.
Volatile financial markets may significantly increase requirements to pledge collateral and adversely affect its liquidity position.
Aegon’s United States and Asia insurance businesses are taken into account in the Solvency II group solvency calculation, may have a significant impact on the group’s capital position. In that context, the opinion published by EIOPA on January 27, 2016 regarding the application of a combination of accounting methods for the group solvency calculation has offered important additional guidance to Aegon that may help to determine its group solvency position under Solvency II. As is generally the case with respect to the interpretation of regulatory requirements, in the future this guidance, or the manner in which this guidance is applied, may change, which may have, depending on the nature of the change, a significant effect on the outcome of the group solvency calculation. As an illustration, in August 2017, adjustments in the calculation for the US led to an increase in the Group Solvency Ratio. Until June 30, 2017, Aegon used 250% of the local Company Action Level (CAL) RBC as the SCR equivalent. Aegon received approval from the
II review being conducted by the European Commission. The review was work in progress as per year-end 2017. The outcomes of this review and potential changes to the relevant regulations, guidelines or opinions, or their application by national supervisory authorities may have an impact on the determination of the LAC-DT that may be taken into account by Aegon going forward.
‘bridge entity’, (d) immediate interventions by the Dutch Minister of Finance concerning an ailing insurance company, and (e) public ownership (nationalization) of (i) all or part of the business of an ailing insurance company or (ii) all or part of the shares or other securities issued by an ailing insurance company or its holding company. The Dutch Intervention Act also contains measures that limit the ability of counterparties to invoke contractual rights (such as contractual rights to terminate or to invoke a right of set-off
Aegon has devoted significant resources to the implementation and maintenance of a comprehensive enterprise risk management framework in all aspects of the business. Nevertheless, its risk measurements make use of historic and public data that may be inaccurate or may not predict future exposures. Further, operational and legal risks involve high volumes of transactions and are affected by frequent changes in Aegon’s businesses and their environments, and the risk management framework may not evolve
When Aegon’s products are distributed through unaffiliated firms, Aegon may not always be able to monitor or control the manner of their distribution despite its significant training and compliance programs. If Aegon’s products would be distributed by such firms in an inappropriate manner, or to customers for whom they are unsuitable, Aegon may suffer reputational and other harm to its business.
Catastrophic events, which are unpredictable by nature, may result in material losses and abruptly and significantly interrupt Aegon’s business activities.
Aegon’s operating results and financial position may be adversely affected by volatile natural and man-made disasters such as hurricanes, windstorms, earthquakes, terrorism, riots, fires and explosions, pandemic disease and other catastrophes. Over the past several years, changing weather patterns and climatic conditions have added to the unpredictability and frequency of natural disasters in certain parts of the world and created additional uncertainty as to future trends and exposure. Generally, Aegon seeks to reduce its exposure to these events through individual risk selection, monitoring risk accumulation, and purchasing reinsurance. However, such events may lead to considerable financial losses to Aegon’s businesses. Furthermore, natural disasters, terrorism, civil unrest, military actions and fires may disrupt Aegon’s operations and result in significant loss of property, key personnel and information about
Vereniging Aegon. As a matter of Dutch corporate law, the shares of both classes offer equal full voting rights, as they have equal nominal values (EUR 0.12). The financial rights attached to a common share B are 1/40th of the financial rights attached to a common share. The amended Voting Rights Agreement ensures that under normal circumstances, i.e. except in the event of a Special Cause,
Vereniging Aegon will no longer be able to exercise more votes than is proportionate to the financial rights represented by its shares. This means that in the absence of a Special Cause, Vereniging Aegon may cast one vote for every common share it holds and one vote only for every 40 common shares B it holds. As Special Cause qualifies the acquisition of a 15% interest in Aegon N.V., a tender offer for Aegon N.V. shares or a proposed business combination by any person or group of persons, whether individually or as a group, other than in a transaction approved by the Executive Board and the Supervisory Board. If, in its sole discretion,
For admittance to and voting at the meeting, shareholders must produce evidence of their shareholding as of the record date. The
Dividends received by a US holder with respect to common shares will be treated as foreign source income for foreign tax credit limitation purposes. Subject to certain conditions and limitations, any Dutch income tax withheld on dividends may be deducted from taxable income or credited against a US holder’s Federal income tax liability. The limitation on foreign taxes eligible for the US foreign tax credit is calculated separately with respect to "passive category income" and "general category income". Dividends distributed by Aegon generally will constitute "passive category income", or, in the case of certain US holders, "financial services income", which is treated as general category income. Each US holder should consult their tax advisor regarding the availability of the foreign tax credit under their particular circumstances.
�� A non-derivative for which the entity is or may be obliged to receive a variable number of the entity's own equity instruments; or �� A derivative that will or may be settled other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of the entity's own equity instruments.
This specific option gives annuitants the ability to protect their retirement investments against downside market risk by allowing the annuitant the right to withdraw a percentage of their withdrawal base each year, regardless of how markets have performed
of capital an insurance company must hold in excess of its
Recognition is the process of incorporating in the statement of financial position or income statement an item that meets the definition of an element and satisfies the following criteria for recognition: �� It is probable that any future economic benefit associated with the item will flow to or from the entity; and �� The item has a cost or value that can be measured with reliability.
4. Based on the International Integrated Reporting Council’s six capitals: financial, human, intellectual, natural, manufactured and social & relationship. Each of these capitals represents a store of value, which companies use and transform through their business activities. It’s important to remember that, during this process, capitals may increase or be depleted in value. For the purposes of reporting, Aegon has chosen the four capitals most relevant to its businesses (financial, human, intellectual and social & relationship).
7. Information on Aegon’s governance system may be found in this report on pages 134-138.