� Americas 24 � The Netherlands 43 � United Kingdom 53 � New Markets 62
International Accounting Standards Board (IASB), with Part 9 of Book 2 of the Netherlands Civil Code and as the Annual
Report Form on 20-F are set out on pages 344-345 of this
In order to track our progress, we have introduced a measurement tool known as Net Promoter Score which will enable us to measure more consistently our efforts to increase customer loyalty across our businesses. Recognizing the role which a strong brand plays in strengthening customer preference, a new multimedia campaign to reposition our lead retail brand in the United States – Transamerica – was launched during the year. The underlying premise of the campaign is to highlight our strong expertise in helping customers achieve their financial goals and longer-term ambitions. All of these efforts support our aim to establish an ongoing relationship with our customers, while also enhancing AEGON’s competitive advantages.
AEGON is a company significantly transformed. We have taken decisive steps to ensure that our businesses continue to adapt and grow in today’s rapidly changing environment. AEGON
And continuing forward, the company is increasing efficiency by encouraging innovation, and focusing even more on providing products and services that serve its customers’
� Management incentives across AEGON’s businesses have been aligned with clear performance targets.
A summary of historical financial data is found in the table below. It is important to read this summary in conjunction with the consolidated financial statements and related notes included elsewhere in this annual report.
2 Earnings reflect net income. Per share data has been calculated based on the weighted average number of common shares outstanding after giving effect to all stock dividends, stock splits and share repurchases through December 31, 2011. Diluted per share data gives effect to all dilutive securities.
Amsterdam’s first working day of the financial year to which the dividend relates. Apart from this, no other dividend is paid
Income before tax (excluding income tax from certain proportionately consolidated associates) 925 1,925 (52%)
Accident and health insurance premiums 1,780 216 – 71 – 2,067 – 2,067
(EUR 67 million), tax benefits related to utilization of losses for which previously no deferred tax asset was recognized
The shares were issued at a price of EUR 5.20 per share.
New life sales decreased 5% to USD 621 million, mainly the effect of the discontinuance of single premium universal life sales in the bank channel during the second half of 2010, as well as repricing of certain universal life products in 2011 to reflect the low interest rate environment. New premium production for accident & health insurance increased to
which includes operating expenses of 1,971 2,249 (12%) 1,492 1,599 (7%)
Term life insurance provides protection for a stated period of time. Benefits are paid to policy beneficiaries in the event of death of the insured during a specified period.
International Markets makes its products and direct response marketing expertise available through brokers, alliances with financial institutions, retailers, telecommunications providers, insurance companies and other database owners in Asia
AEGON USA has decided to de-emphasize the sale of fixed annuities.
(TCI), the underwriting and wholesaling broker-dealer, distributes variable annuities and mutual funds through major wirehouse firms, regional broker dealers, independent financial planners and a large bank network. TCI serves these distribution channels through company-owned and external wholesalers.
Usually these annuity payments are paid monthly for the life of the participant or participant and spouse, commencing immediately for retired participants or at some date in the future for deferred participants.
January, 2011 and regulations may be promulgated to address perceived gaps in the regulatory framework currently governing broker-dealers and investment advisers. Another study required by Dodd-Frank Act and conducted by the US
This strategy takes into account currency, yield and maturity characteristics. Asset diversification and quality considerations are also taken into account, along with considerations of the policyholders’ guaranteed or reasonably expected excess interest sharing. Investment-grade fixed income securities are the main vehicle for asset/liability management, and AEGON
Bonuses are either paid in cash (mainly in pension business, as described in the following section) or used to increase the sum assured. For one common form of profit sharing, the bonus levels are set by reference to external indices that are based on predefined portfolios of Dutch government bonds. The bonds included in the portfolio have different remaining durations and interest rates. Together they are considered an approximation of the long-term rate of return on Dutch high quality financial investments. Another common form of profit sharing is via interest rebates, whereby policyholders receive a discount on single premium business which reflects the expectation that the actual rate of return on the contract will exceed the minimum interest guarantee used to determine the premiums and sums assured. Here too, the expected actual rate of return is based on a portfolio of Dutch government bonds.
The Netherlands provides a full range of pension products and services. In addition, TKP Pensioen is specialized in pension administration for company and industry pension funds.
DNB’s regulatory reporting is based on a single entity focus and is designed to highlight risk assessment and risk management.
For non-life, AEGON The Netherlands only reinsures its fire and motor insurance business. For fire insurance, an “excess of loss” contract is in place with a retention level of EUR 3 million for each separate risk and EUR 20 million for each event. For motor insurance, AEGON The Netherlands has reinsurance in place on a similar basis with a retention level of EUR 2.5 million for each event.
Net income amounted to GBP 72 million for 2010, a significant improvement compared with GBP 8 million the previous year.
AEGON Retirement Choices (ARC). ARC is a technology driven delivery system for pensions, individual savings accounts
�� AEGON UK Distribution, which consists of intermediary distribution and advice businesses.
AEGON’s offshore contracts have traditionally been marketed to high net-worth individuals. Offshore contracts offer considerable tax advantages and a wide choice of investment options. These contracts tend to form part of a broader retirement strategy, primarily because there are fewer restrictions on how and when benefits may be taken.
1 The onshore bond is provided by Scottish Equitable plc. The offshore contracts are offered by AEGON Ireland plc and are reported separately in the New Markets segment, rather than as part of the UK segment.
Preferred life is an individual life term insurance product which offers insurance protection at competitive pricing. The product distinguishes between smoker and non-smoker status and uses standard and preferred pricing dependent on the health status of the client. Group life contracts are renewable each year. They also carry optional accident and health cover.
In Hungary, a small part of the current new business provides a minimum interest guarantee of 2%.
Europe experienced considerable growth. This was mainly due to the region’s strong economic growth experienced before the financial turmoil, and to the widespread reform of the pension system in many countries.
At the end of 2011, further legislation changes were enacted in
Hungary. Accordingly all the contributions deducted from the monthly wages of the members will be transferred to the state driven pension system (Pillar I) in the future. Members can transfer contribution to the private (formerly mandatory)
This activity is also supervised by the HFSA. Slovakia’s mandatory pension market is regulated by Act 43/2004 on pension asset management companies and respective notices, and the voluntary pension market by Act 650/2004 on
Supplementary Pension Insurance. Both the mandatory and the voluntary pension business fall under the supervision of the National Bank of Slovakia (NBS). In Romania, the private pension system is regulated and supervised by the Private
AEGON Sony Life in Japan has two primary channels of distribution. One is the life planner channel of Sony Life,
In response to the CIRC’s bancassurance rules, banks are increasing their interests and taking controlling stakes in insurers. In February 2011, Agricultural Bank of China took a 51% holding in Jiahe Life. In June 2011, China Construction
Companies, which restated and regulated the design and classification, the examination, approval and filing and the changes and the stop of the use of the insurance clauses. In other fields, CIRC further strengthened regulation on operation of personal insurance business to protect the legitimate rights and interests of the insured and policyholder.
AEGON Sony Life reinsures (cede) 100% of its guarantees on the variable annuities to SA Re. AEGON Sony Life may utilize third party reinsurance for a minor portion, considering the transfer pricing issues.
On March 7, 2012, it was announced that the FROB awarded
AEGON’s current partnerships distribute a combination of life insurance, health and pension products. AEGON also uses brokers to distribute its products, particularly individual life insurance, throughout both urban and rural areas.
AEGON is seeking to diversify its insurance risk and limit the maximum possible losses on risks that exceed policy retention levels. Maximum retention levels vary by product and by nature of the risk being reinsured. Generally, however, the retention limit is between EUR 45,000 and EUR 60,000 per life insured. AEGON Spain remains contingently liable with respect to the amount ceded should the reinsurance company fail to meet its obligations.
In July 2007, La Mondiale and fellow insurer AG2R announced a merger. The merger – which does not affect AEGON’s partnership with La Mondiale – has created a significant insurer in France, who ranks among the ten largest insurer of individuals, serving some 8 million customers (including retirees). The new group became operational at the start of 2008.
AEGON Ireland does not employ a (direct) sales force, but works with the sales force of the AEGON companies in the
Continued difficult economic and financial conditions during 2011 meant that new product launches were limited. AEGON’s main competitors in Europe are AXA, Metlife, Allianz, ING,
�� Third party business is not normally on the AEGON balance sheet and typically product design and distribution are controlled by AEGON Asset Management rather than the affiliated insurance companies, although some third party business is sourced through co-operation arrangements with the insurance affiliates. The retail businesses typically sell collective investment vehicles (mutual funds) to the public via intermediaries. The main asset classes are fixed income and equities and the funds are normally managed against a peer group target. The institutional businesses typically sell bespoke services to large corporations or pension funds. They employ a full range of asset classes and manage the funds against objectives, targets and risk profiles agreed with the clients. Both absolute and relative return products are offered. AEGON Asset Management distributes these services internationally.
�� Establishing risk tolerances and supporting policies to limit exposure to a particular risk or combination of risks.
�� To reassure external constituencies that AEGON has appropriate risk management structures and controls in place.
Similar to 2010, interest rates continued to decline especially in the second half of 2011 from already low levels. Falling rates particularly impacted investment income and margins on financial guarantees included in certain policies. AEGON took 1 Please note that the information here is intended as an overview only. A more detailed explanation of credit risk, equity and other investment risk, interest rate risk, currency exchange rate risk, liquidity risk, underwriting risk and operational risk, as well as other company-wide risk management policies may be found in note 4 of the consolidated financial statements. Further information on sensitivity analyses may also be found on these pages.
Base interest rates set by central banks and government treasuries remained at the historically low levels initiated in response to the worldwide recession. Certain central banks and government treasuries, including the US Federal Reserve and the European Central Bank, announced during 2011 initiatives designed to maintain or lower long-term interest rates over the next year or longer. Although base rates remained low, credit spreads remained at historically high levels in 2011 with widening credit spreads for sovereign debt in a number of European countries, which has had an adverse impact on credit spreads for banks and other financial institutions, in particular in such countries.
not have a material adverse effect on AEGON’s business, reputation, results of operations, cash flow, financial position and solvency.
AEGON is subject to certain requirements which may have a material adverse effect on AEGON’s business, results of operations and financial condition.
AEGON is exposed to currency fluctuations, changes in the fair value of AEGON’s investments, the impact of interest rate, equity markets and credit spread changes and changes in mortality and longevity. AEGON uses common financial derivative instruments such as swaps, options, futures and forward contracts to hedge some of the exposures related to both investments backing insurance products and company borrowings. This is a more pronounced risk to AEGON in view of the stresses suffered by financial institutions and the volatility of credit and equity markets. AEGON may not be able to manage the risks associated with these activities successfully through the use of derivatives. In addition, a counterparty may fail to honor the terms of its derivatives contracts with AEGON. AEGON’s inability to manage risks successfully through derivatives, a counterparty’s failure to honor AEGON’s obligations or the systemic risk that failure is transmitted from counterparty to counterparty could each have a material adverse effect on AEGON’s business, results of operations and financial condition.
AEGON operates is intense. AEGON’s ability to attract and retain key personnel, in particular senior officers, experienced portfolio managers, mutual fund managers and sales executives, is dependent on a number of factors, including prevailing market conditions and compensation packages offered by companies competing for the same talent. As a part of the governmental response in Europe and the US to the financial crisis in 2008, there have been various legislative initiatives that have sought to restrict the remuneration of personnel, in particular senior management, with a focus on performance-related remuneration and limiting severance payments. These restrictions, alone or in combination with the other factors described above, could adversely affect AEGON’s ability to hire and retain qualified employees.
AEGON is at risk if SCOR defaults on its obligations under the policies we retroceded to them. A bankruptcy or insolvency or inability of SCOR to satisfy its obligations could have a material adverse effect on AEGON’s financial position and results of operation. In addition, AEGON agreed to satisfy significant collateral funding obligations of SCOR in connection with the policies AEGON retroceded to it.
AEGON’s acquisitions could result in additional indebtedness, costs, contingent liabilities and impairment expenses related to goodwill and other intangible assets. In addition, they may
�� International political and economic conditions, including the effects of terrorist attacks, military operations and other developments stemming from such events and the uncertainty related to these developments.
Vereniging AEGON entered into an equity repurchase facility and a back-up credit facility. On February 9, 2010 both facilities were replaced by a three year term and revolving facilities agreement with a consortium of banks that can be extended until 2014. Under the new agreement AEGON’s common shares in the possession of Vereniging AEGON are pledged to the consortium of banks. If Vereniging AEGON were to default under the facilities agreement, the lenders may dispose of
AEGON’s capital base consists of the following components: �� Core capital, which comprises shareholders’ equity
USD 650 million matures in 2012, USD 1.5 billion matures in 2015 and USD 0.5 billion matures in 2017. In addition,
AEGON also maintains USD 425 million of shorter-dated bilateral back-up facilities. AEGON N.V. has not drawn any amounts under any of its liquidity back-up facilities.
Liquidity consists of both liquid assets held in investment portfolios, as well as inflows generated by premium payments and customer deposits. These are used primarily to purchase investments, as well as to fund benefit payments to policyholders, policy surrenders, operating expenses, and to pay dividends to AEGON N.V., if the subsidiary’s capital position so allows. At AEGON N.V., liquidity is sourced from internal payments by operating companies and accessing capital and money markets.
� AEGON’s risk management and control systems functioned properly in 2011.
In 2011, the company’s capital position continued to be strong, with excess capital at EUR 3.4 billion on December 31, 2011.
The Board met in March 2011 for its annual two-day strategy meeting. The Board and management extensively discussed the changing environment in which AEGON operates and what impact these changes could have on the business in the medium term. The Board agreed with management that developments in technology, social media and innovation would be key drivers for its business in the near to mediumterm future. The Board also discussed regulatory developments, which could be an indicator of increasing protectionism. In this meeting, the Board also reviewed
In June, the Supervisory Board discussed with management the preparation for the A&I conference in that month and further details on the four financial targets shared with the market earlier in the year.
The Audit Committee also discussed AEGON’s compliance with the Sarbanes Oxley Act of the United States, regular reports from the Group Compliance Officer on fraud and general compliance issues and the quarterly legal updates.
In light of the developments on executive remuneration in the Netherlands, in particular of financial institutions, and taking into account that the company had not yet fully repurchase the capital securities, the Supervisory Board agreed with the proposal of the members of the Executive
Committee were the 2011 targets for the Executive Board members and the scenario analysis of payout levels under the Executive Board Remuneration Policy.
In 2012, no member comes up for reappointment. The retirement schedule members of the Executive Board is included in the company’s Executive Board Rules and posted on AEGON’s corporate website, www.aegon.com.
AEGON pays a higher fee to members of its Audit Committee because of the additional workload involved. Information on members of the Supervisory Board and the composition of
Framework. AEGON’s Remuneration Policy for members of the Executive Board is derived from this Framework and sets out terms and conditions for members of the company’s
Group financial IFRS based 30% Group underlying earnings after tax, Return on Equity
� Jan J. Nooitgedagt, Chief Financial Officer and member of the Executive Board. Mr. Nooitgedagt was appointed member of the Executive Board in 2009 for four years.
– and to the extent that – the Board has been authorized to do so by the General Meeting of Shareholders. A resolution authorizing the Executive Board to issue new shares is usually presented at AEGON’s annual General Meeting of
AEGON has no knowledge of any agreement between shareholders that might restrict the transfer of shares or the voting rights pertaining to them.
Aggregate tax effect of items recognized in other comprehensive income / (loss) – – (1,155) (12) – – (1,167) – (1,167)
TOTAL COMPREHENSIVE INCOME / (LOSS) FOR 2011 – 873 2,506 379 – – 3,758 3 3,761
Aggregate tax effect of items recognized in other comprehensive income / (loss) – – (2,369) 54 – – (2,315) – (2,315)
Repurchase of convertible core capital securities – – – – (1,000) – (1,000) – (1,000)
Cash flow movements on operating items not reflected in income 6,609 4,787 (8,565)
CONSOLIDATED CASH FLOW STATEMENT OF AEGON N.V. FOR THE YEAR ENDED DECEMBER 31 (CONTINUATION)
142 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF AEGON N.V. NOTE 1 - 2.1.2 1 GENERAL INFORMATION
Group on behalf of policyholders are presented in the consolidated financial statements as investments for account of policyholders.
The resulting exchange differences are recognized in the “foreign currency translation reserve”, which is part of shareholders’ equity. On disposal of a foreign entity the related cumulative exchange differences included in the reserve are recognized in the income statement.
In addition, in certain instances the Group designates financial assets to this category when by doing so a potential accounting mismatch in the financial statements is eliminated or significantly reduced.
Charges and interest paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts are included in the calculation.
The fair value is calculated net of the interest accrued to date and is based on market prices, when available. When market prices are not available, other valuation techniques, such as option pricing or stochastic modeling, are applied.
In some instances, realized gains or losses on investments have a direct effect on the measurement of the insurance assets and liabilities. For example, some insurance contracts include benefits that are contractually based on the investment returns realized by the insurer. In addition, realization of gains or losses on available-for-sale investments can lead to unlocking of VOBA or DPAC and can also affect the outcome of the liability adequacy test to the extent that it considers actual future investment returns. For similar changes in unrealized gains and losses, shadow accounting is applied. If an unrealized gain or loss triggers a shadow accounting adjustment to VOBA, DPAC or the insurance liabilities, the corresponding adjustment is recognized through other comprehensive income in the revaluation reserve, together with the unrealized gain or loss.
The liability for outstanding claims and benefits is established for claims that have not been settled and any related cash flows, such as claims handling costs. It includes claims that have been incurred but have not been reported to the
Plan improvements are charged directly to the income statement, unless they are conditional on the continuation of employment. In this case the related cost is deducted from the liability as past service cost and amortized over the vesting period. In measuring the defined benefit obligation the Group uses the projected unit credit method and actuarial assumptions that represent the best estimate of future variables. The benefits are discounted using an interest rate based on the market yields for high-quality corporate bonds on the balance sheet date.
MONEY MARKET AND OTHER SHORT-TERM INVESTMENTS AND DEPOSITS WITH FINANCIAL INSTITUTIONS
(2010: EUR 469 million), due to changes in liquidity for specific debt securities.
As an insurance company, AEGON is in the “business of risk” and as a result is exposed to a variety of risks. A description of AEGON’s risk management and control systems is given below on the basis of significant identified risks for us.
Group level. AEGON’s integrated approach to risk management involves common measurement of risk and scope of risk coverage to allow for aggregation of the Group’s risk position.
Results of AEGON’s sensitivity analyses are presented throughout this section to show the estimated sensitivity of net income and shareholders’ equity to various scenarios. For each type of market risk, the analysis shows how net income and shareholders’ equity would have been affected by changes in the relevant risk variable that were reasonably possible at the reporting date. For each sensitivity test the impact of a reasonably possible change in a single factor is shown. The analysis considers the interdependency between interest rates and lapse behavior for products sold in the
The table that follows shows the Group’s maximum exposure to credit risk from investments in general account financial assets, as well as general account derivatives and reinsurance assets, collateral held and net exposure. Please refer to note 49 and note 50 for further information on capital commitments and contingencies and on collateral given, which may expose the Group to credit risk.
AEGON has entered into free-standing credit derivative transactions (Single Tranche Synthetic CDOs and Single Name
AEGON has issued the Swaps under an ISDA Master Agreement requiring collateralization of the Swap’s market value.
The amount of collateral to be posted by AEGON is subject to a threshold of EUR 15 million, provided AEGON maintains its current credit rating.
AEGON’s largest credit exposures are to JPMorgan, Rabobank, Dutch sovereigns, General Electric and Goldman Sachs.
Of which held by AEGON Americas, NL and UK 97,412 8,419 (3,228) 102,604 81,033 21,571
AEGON Americas, AEGON The Netherlands and AEGON UK hold EUR 6,775 million of available-for-sale (AFS) residential mortgage-backed securities (RMBS), of which EUR 4,934 million is held by AEGON USA. RMBS are securitizations of underlying pools of residential 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
AEGON USA does not currently invest in or originate whole loan residential mortgages. RMBS of AEGON USA are monitored and reviewed on a monthly basis. Detailed cash flow models using the current collateral pool and capital structure on the portfolio are updated and reviewed quarterly. Model output is generated under base and stress-case scenarios. AEGON’s RMBS asset specialists utilize widely recognized industry modeling software to perform a loan-byloan, bottom-up approach to modeling. Key assumptions used in the models are projected defaults, loss severities, and prepayments. Each of these key assumptions varies greatly based on the significantly diverse characteristics of the current collateral pool for each security. Loan-to-value, loan size, and borrower credit history are some of the key characteristics used to determine the level of assumption that is utilized. Defaults were estimated by identifying the loans that are in various delinquency buckets and defaulting a certain percentage of them over the near-term and longterm. Assumed defaults on delinquent loans are dependent on the specific security’s collateral attributes and historical performance.
and Negative Amortization RMBS are as follows: prepayment assumptions range from approximately 1% to 25% with a weighted average of approximately 5.4%, assumed defaults on delinquent loans range from 50% to 100% with a weighted average of approximately 82.3%, assumed defaults on current loans are dependent on the specific security’s collateral attributes and historical performance, while loss severity assumptions range from approximately 13.9% to 75%, with a weighted average of approximately 50.0%. Additionally, quantitative ranges of significant assumptions within AEGON’s modeling process for the RMBS subprime mortgage portfolio are as follows: prepayment assumptions range from approximately 2% to 6% with a weighted average of approximately 5.2%, assumed defaults on delinquent loans range from 60% to 100% with a weighted average of approximately 87.0%, assumed defaults on current loans are dependent on the specific security’s collateral attributes and historical performance, while loss severity assumptions range from approximately 65% to 103%, with a weighted average of approximately 73.2%.
investments are primarily backed by loans with fixed interest rates for the entire term of the loan. Additionally, approximately two-thirds of the Alt-A portfolio is invested in super-senior tranches. Mortgage-backed securities classified as super-senior are those that substantially exceeded the subordination requirements of AAA-rated securities at origination. The tables below summarize the credit quality * and the vintage year of the available-for-sale Alt-A
There is one individual issuer rated below investment grade in the ABS – other sector which has an unrealized loss position greater than EUR 25 million.
For the Other ABS holding, the notes are secured by a pool of leases on commercial real estate properties, diversified across various property types (restaurant, office, retail, etc) and geographic locations. These are triple net leases whereby the tenant is responsible for paying the building's property taxes, building insurance and the cost of any maintenance or repairs the building may require during the term of the lease. Payments from the underlying leases are the primary source of repayment on the notes, with the secondary source of repayment being liquidation of the underlying commercial real estate properties. Spirit Master Fndg LLC has the benefit of a financial guaranty policy
212 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF AEGON N.V. NOTE 4
AEGON's policy is to pursue realization of the collateral in an orderly manner as and when liquidity permits. AEGON
Debt securities - carried at fair value 54 70 49 173 73 57 15 145
AEGON’s earnings depend significantly upon the extent to which actual claims experience differs from the assumptions used in setting the prices for products and establishing the technical liabilities and liabilities for claims. To the extent that actual claims experience is less favorable than the underlying assumptions used in establishing such liabilities, income would be reduced. Furthermore, if these higher claims were part of a permanent trend, AEGON may be required to increase liabilities, which could reduce income. In addition, certain acquisition costs related to the sale of new policies and the purchase of policies already in force have been recorded as assets on the statement of financial position and are being amortized into income over time. If the assumptions relating to the future profitability of these policies
On March 1, 2011, the European Court of Justice (ECJ) delivered a judgment in the Test Achats case which relates to the ability of an insurance company to use gender as a rating factor when pricing risk. The ECJ has ruled that using gender as a rating factor when pricing risk is invalid. However, the ECJ has granted a transitional period for relief for implementation. The effect of this is that, as from December 21, 2012, it will be unlawful to use gender-related factors for determining premiums and benefits under insurance policies. Currently AEGON uses gender as a risk factor pricing for both general and life insurance policies.
Impairment charges / (reversals) on non-financial assets and receivables 161 (2) 1 16 – 176
Separate accounts and investment funds 61,729 – 8,495 1,060 – – 71,284
Investment income from financial assets held for general account: 2011 2010 2009
As a result of the divestment of the life reinsurance business, Transamerica Reinsurance (TARe), to SCOR amortization of VOBA and future servicing rights increased to EUR 749 million. Of which EUR 25 million (2010: EUR 3 million, 2009: EUR (3) million) is classified as non underlying earnings for segment reporting purposes. Included in employee and administration expenses is EUR 206 million of restructuring charges (2010: EUR 74 million; 2009: nil) that are classified as non underlying earnings for segment reporting purposes
Impairment charges on financial assets, excluding receivables 1 461 615 1,463
Impairment reversals on financial assets, excluding receivables 1 (55) (90) (136)
Coupons and premium on convertible core capital securities (750) (63) (148)
The potential conversion of the convertible core capital securities is not taken into account in the calculation of the diluted earnings per share for 2009 as this would have had an anti-dilutive effect.
Rental income of EUR 93 million (2010 EUR 100 million; 2009: EUR 86 million) is reported as part of investment income in the income statement. EUR 8 million (2010: EUR 3 million; 2009: EUR 7 million) is attributable to rent on foreclosed real estate. Direct operating expenses (including repairs and maintenance) arising from investment property that generated rental income during the period amounted to EUR 78 million (2010: EUR 72 million; 2009: EUR 65 million).
254 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF AEGON N.V. NOTE 25 - 26
The periods when the cash flows are expected to occur are as follows: < 1 year years 2011 Total
The Netherlands to hold 2% of its assets relating to banking activities in an account with the Dutch Central Bank.
Net cash flows from financing activities decreased by EUR 1,637 million to EUR 119 million inflow (2009: EUR 1,756 million inflow). The decrease is a result of lower net inflows from trust pass-through securities, subordinated loans and borrowings compared to 2009 (net inflows EUR 974 million in 2010 versus EUR 2,397 million in 2009) and a EUR 1,012 million share issuance in 2009 that did not recur in 2010, partly offset by a lower (EUR 500 million) repurchase of convertible core capital securities and lower (EUR 210 million) premiums and coupons on these securities.
USD 200 million Zero Coupon Bonds 1 – – 1982 / 12 142 122
EUR 75 million Medium-Term Notes 1, 9 4.625% December 9 2004 / 19 75 72
5 Outstanding amounts can vary up to the maximum stated nominal amount. 6 Private Value-in-Force (ViF) securitization by AEGON UK to monetize a portion of future profits associated with an existing book of unit-linked business. 7 The first optional redemption date is February 2016; the legal maturity date is February 2094. Notes are fully collateralized by mortgage loans which are part of AEGON’s general account investment.
Included in debentures and other loans is EUR 1,010 million (2010: EUR 987 million) relating to borrowings measured at fair value. For the year 2011, AEGON’s credit spread had a positive impact of EUR 30 million on income before tax
(Gains) / losses on curtailment (56) – (56) (29) – (29)
Movements during the year in plan assets for retirement benefit plans: 2011 2010
AEGON USA has defined benefit plans covering substantially all its employees that are qualified under the Internal
Core capital, which consists of shareholders’ equity, excluding revaluation reserve, was EUR 17,536 million at December 31, 2011 compared to EUR 17,870 million at December 31, 2010. The convertible core capital securities which were issued in 2008 were fully repurchased from the Dutch state in 2011, as described in note 31.
The financial agreements may also include a cross default provision which may be triggered if and when any financial indebtedness of any member of the Group is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default.
The following table analyses the fair value of the assets received in relation to securities lending and (reverse)
AEGON has pledged EUR 7,717 million (2010: EUR 7,092 million) financial assets as collateral for general account liabilities and contingent liabilities. None (2010: none) of the financial assets pledged can be sold or repledged by the counterparty.
The business residing in Transamerica International Reinsurance, Bermuda (TIRe) has been retroceded to SCOR.
AEGON Central & Eastern Europe. The total remuneration for the members of the Management Board over 2011 was
OVERVIEW OF CONDITIONAL SHARES AND CASH OF ACTIVE MEMBERS OF THE EXECUTIVE BOARD
For each of the members of the Executive Board, the shares held in AEGON as shown in the table above do not exceed 1% of total outstanding share capital at the balance sheet date.
TO: THE SUPERVISORY BOARD AND THE EXECUTIVE BOARD OF AEGON N.V.
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union and with Part 9 of Book 2 of the Dutch Civil Code, and for the preparation of the Report of the Executive Board in accordance with Part 9 of
Changes in revaluation subsidiaries – – 2,506 – – – – – 2,506
As of December 31, 2011, 207 million common shares were held in the form of New York Registry shares. As of
To AEGON’s knowledge, only one other party holds a capital and voting interest in AEGON N.V in excess of 5%.
the total. The condensed consolidating statement of financial position is shown as of December 31, 2011 and 2010 and the condensed consolidated income statements and condensed consolidated cash flow statements are shown for the years ended December 31, 2011, 2010 and 2009. The information is prepared in accordance with IFRS.
Share in profit / (loss) of associates – – 23 – 23
Issuance and repayments of share capital 1,012 – – – 1,012
Issuance, repurchase and coupons of convertible core capital securities (2,250) (563) (1,273)
States), AEGON N.V.’s internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
12.2 Certification of the Chief Financial Officer pursuant to Rule 13A-14 or 15D-14 of the Securities Exchange Act of 1934.
Plan – 2007, 12. Registration Statement (Form S-8 No. 333-151984) pertaining to AEGON USA Companies Employee Stock Option
Under Dutch law, members of the Central Works Council responsible for AEGON in the Netherlands are elected by AEGON The Netherlands’ employees. The Central Works Council has certain defined powers at the level of the
AEGON uses the cash flows from the operating subsidiaries to pay holding expenses, including funding costs.
Also, AEGON’s operating subsidiaries are subject to local insurance regulations which could restrict dividends to be paid to us. There is no requirement or assurance that we will declare and pay any dividends.
Vereniging AEGON shall notify the General Meeting of Shareholders. In this event, Vereniging AEGON retains full voting rights on the preferred shares for a period limited to six months.
9. There are no provisions discriminating against any existing or prospective holder of shares as a result of such shareholder owning a substantial number of shares.
For admittance to and voting at the meeting, shareholders must produce evidence of their shareholding as of the record date. The Dutch law determines that the record date is twenty-eight days prior to the General Meeting of Shareholders.
State could opt to receive repayment in cash at the original issue price of EUR 4.00 per security plus accrued interest.
Corporate Entity are generally subject to corporate income tax in its hands.
Netherlands, other than by way of the holding of securities or through an employment contract, to which enterprise
Subject to certain conditions, a legal entity resident in a member state of the European Union, that is not subject to a profit based tax in that member state, and, should that entity be a resident in the Netherlands, would not be subject to Dutch corporate income tax, is entitled to a refund of the Dutch dividend withholding tax withheld.
�� Individuals if the shares do not belong to the assets of a business enterprise or do not belong to a substantial interest.
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
�� Require the specific pre-approval of the Audit Committee (“specific pre-approval”). Appendices to the Pre-approval
Maximum number of shares that may yet be purchased under the plans or programs at end of month
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
Share in underlying earnings before tax of associates 13 9 15 13 50 91 204 102 49 446 Realized gains/(losses) on investments 126 148 129 255 658
� Changes in the performance of AEGON’s investment portfolio and decline in ratings of the company’s counterparties.