In addition to enabling our businesses to connect and engage with customers better and with greater frequency, technology also delivers the tools to create a truly distinctive and relevant customer experience. We are committed to providing greater ease of interaction with our businesses, simplifying product explanations, and empowering customers with practical online tools that will both enable them to better understand their financial needs and provide greater clarity about the products and services available to address these needs. This approach, we believe, is essential to our focus on building customer loyalty and strengthening our competitive advantage in an increasingly crowded market.
Mark Mullin (1963, American) Member of the Management Board Chief Executive Officer of Aegon Americas Mark Mullin has spent more than 20 years with Aegon in various management positions in both the United States and Europe.
Many companies increasingly recognize the connection between financial performance and responsible resources management.
Aegon has allocated considerable resources to the development of its partial internal model. This model is currently in the pre-application phase with Aegon´s College of Supervisors.
European countries; and Aegon Asset Management Holding B.V., the holding company for some of its asset management entities.
Europe and Asia, and serves millions of customers. Its main markets are the United States, the Netherlands and the
Selected consolidated income statement information In EUR million (except per share amount) 2013 2012 1) 2011 2) 2010 2) 2009 2)
equity market performance in 2013. Aegon restructured its equity hedges as the equity collar hedge expired at the end of the year.
�� In the Netherlands, underlying earnings before tax increased 9% to EUR 355 million. Higher Pension earnings, driven mostly by a benefit resulting from observed mortality of
EUR 25 million and improvement in Non-life more than offset lower earnings in Life & Savings, due mostly to reduced policy charges on unit-linked products of EUR 28 million as part of the acceleration of product improvements to unit-linked insurance policies.
compared to 2012. The positive impact of higher equity markets was more than offset by adverse persistency of
Impairment charges Impairments decreased 55% in 2012 compared to 2011 to
Commissions and expenses Commissions and expenses in 2012 decreased by 8% compared to 2011 to EUR 5,765 million, largely driven by lower operating expenses. Operating expenses decreased 7% compared to 2011 to EUR 3,177 million, mainly as a result of the implementation of cost savings programs in the United Kingdom, the Netherlands, and the Americas.
Of which Income tax from certain proportionately consolidated joint ventures and associates included in income before tax (4) (4) 0% (3) (3) 0%
1 As of the first quarter of 2012, Aegon has revised its financial reporting to reflect changes in its organization. Businesses in Asia, which were previously managed by Aegon Americas, are included in the Asia line of business within the ‘New Markets’ segment. For the full year 2011, the underlying earnings before tax generated by the Asian operations totaling EUR 37 million were previously reported under the ‘Americas’ segment. The 2011 and 2010 figures have been revised to reflect this change.
Gross deposits amounted to USD 34.7 billion in 2012 compared to USD 32.0 billion in 2011. Gross deposits in variable annuities, retail mutual funds and retirement plans were all higher than in 2011. Variable annuities gross deposits increased in 2012 despite product re-pricing throughout the year to reflect the continued low interest rate environment and subsequent higher hedging costs. The increase in retirement plan deposits was driven by higher takeover deposits and successful efforts to increase inflows from the existing client base through higher contributions and larger participation count.
Aegon Canada Based in Toronto, Aegon Canada offers a range of insurance products and financial services, primarily through its
Premiums paid on variable annuity contracts are invested in underlying funds chosen by the policyholder, including bond and equity funds, and types of asset-allocation funds. A fixed interest account is available on most products and the underlying funds are selected by a policyholder, within certain boundaries, based on the policyholder’s preferred level of risk. The assets and liabilities related to this product are legally segregated in separate accounts of the insurance company for the benefit of variable annuity policyholders. These separate accounts are classified as investments for the account of policyholders on Aegon’s statement of financial position. Variable annuity contracts contain riders, such as guaranteed minimum death, maturity, withdrawal, accumulation or income benefits.
Transamerica Retirement Solutions’ institutional market clients are generally organizations with 250 to 100,000 employees and between USD 15 million and USD 2 billion in retirement assets.
The market is growing in this segment as more employers look to reduce the cost and complexity of their pension liabilities, often driven by widespread economic and sector restructuring.
The retirement plan market continues to evolve rapidly and is facing growing regulatory compliance pressures, continuing demand for technological innovation, pricing pressures, and provider consolidation. Aegon USA’s ability to achieve greater economies of scale in operations will be assisted by continued growth in key market segments, technology improvements, and process management efficiency.
Additionally, proposals to place restrictions on direct mail are considered from time to time by the US Congress and states.
Some of the Aegon USA companies are registered as brokerdealers with the SEC under the Securities Exchange Act of 1934, as amended (the Securities Exchange Act) and are regulated by the FINRA. A number of Aegon USA companies are also registered as investment advisors under the Investment
Since 2013, Aegon the Netherlands has offered annuity and linear residential mortgage loans, either individually or in combination. Previously the business also offered interest-only, unit-linked and savings mortgage loans.
Kroodle, one of the world’s first insurance companies to operate primarily through Facebook allowing customers in the
Aegon the Netherlands has been a key player in the total life market for many years and is ranked second based on gross premium income in 2012, after ING. The life insurance market in the Netherlands comprises pensions and life insurance. The top six companies by gross premium income accounted for approximately 90% of the total premium income in 20121. Based on gross premium income in 20121, Aegon the Netherlands ranks first in the pension market and sixth in the individual life insurance market. Aegon the Netherlands is one of the smaller players in the non-life market. Aegon the Netherlands’ non-life market share is around 4%1, measured in premium income.
Supervision Act). This law, which applies equally to banking and insurance operations, introduced greater consistency to requirements and supervision.
Most of the liabilities of Aegon the Netherlands, insurance or otherwise, are nominal and long-term. Based on their characteristics, a long-term liability-driven benchmark is derived.
For non-life, Aegon the Netherlands reinsures its property, marine and motor third-party liability business only. For property insurance, an "excess of loss" contract is in place with a retention level of EUR 3 million for each separate risk and
Income tax attributible to policyholder return (27) (32) 16% (32) (40) 20%
Results 2013 United Kingdom 2013 net income of GBP 102 million is 27% lower than 2012 due to the impact of business transformation costs, higher impairment charges and lower underlying earnings before tax as the positive impact of higher equity markets was more than offset by adverse persistency related to the Retail Distribution Review (RDR) and investments in technology. New life sales increased by 13% to GBP 860 million due to higher sales in group pensions and strong platform growth. Platform assets reached GBP 1.3 billion by the end of 2013.
GBP 2 million, improving over last year mainly due to cost savings.
Aegon UK is focused on two core markets in the United Kingdom, at-retirement and workplace savings. Both markets present opportunities for growth and are markets where Aegon UK has a heritage of expertise.
For its with-profit business, Aegon UK’s general philosophy is to match guarantees with appropriate investments. However, the nature of with-profit businesses typically prevents perfect matching, and the role of the MIC is therefore to monitor the capital implications of any mismatching. On a regular basis, reports are produced covering the impact of a range of possible investment scenarios on the solvency of each of the funds. These reports allow the investment strategy for the with-profit funds to be discussed and are summarized for the With-Profits Forum, a sub-committee of the Board of Aegon UK.
Guarantees With the exception of Aegon Secure Lifetime Income and 5 for
�� In Asia, new life sales increased 26% to EUR 67 million compared to 2012. This was mainly driven by the launch of a new universal life product and the expanded cooperation with a number of private banks.
EUR 21 million. �� Underlying earnings before tax from Variable Annuities
Preferred life is an individual life term insurance product which offers insurance protection. 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 and carry optional accident and health cover.
In the CEE region, Aegon has substantial traditional life insurance portfolios, mainly in Hungary, Turkey and Ukraine. The other
(incorporated in 2004); and Aegon Romania (incorporated in 2008). Similarly, Aegon is not a significant participant in Turkey, in which it acquired its business in 2008.
6 Source: The Central Bank of Hungary, 7 Source: The Association of Pension Fund Management Companies, Slovakia, www.adss.sk.
Aegon Religare Life Insurance Co. Ltd (Aegon Religare) in 2008. By December 31, 2013, Aegon Religare had a pan-
The shareholders in the joint venture also agreed to jointly establish a reinsurance company, SA Reinsurance Ltd (SARe), to allow Aegon and Sony Life greater flexibility in the pricing and product design of its annuity products. SARe launched in 2010 and is based in Bermuda with the purpose of hedging the guarantees of Aegon Sony Life’s annuities.
focuses on protection products that generate risk premiums, such as term life insurance, personal accident insurance, and supplemental health insurance.
Aegon-CNOOC ranked thirty-ninth among life insurance companies and twelfth among foreign life companies, based on total premium income . The company’s market share among foreign-invested companies was 2.5%1. In descending order, Aegon-CNOOC’s channel contributions were brokerage, bancassurance, direct marketing, group and agency annual premium equivalent production and bancassurance, group, brokerage, and direct marketing and agency first year premium production.
The insurance industry in Singapore is regulated by the Monetary of Singapore (the “MAS”). The MAS is an integrated supervisor overseeing all financial institutions in Singapore - banks, insurers, capital market intermediaries, financial advisors and the stock exchange. Its mandate is to foster a sound and progressive financial services sector in Singapore. The MAS also promotes a strong corporate governance framework and close adherence to international accounting standards.
Aegon sold its stake in the partnership with Unnim on June 3, 2013, and with Caja Mediterraneo on July 19, 2013.
Asset Management) or through competition with external asset managers in an ‘open architecture’ structure (the insurance affiliate seller may choose to delegate funds to an external fund manager other than Aegon Asset Management). Aegon Asset
These working groups are established by the ERMC, including their membership, scope of work and deliverables.
Governance Aegon’s Corporate Treasury department manages and coordinates capital and liquidity management strategies and processes. The department acts under direction of the Group
Total capitalization Aegon’s total capitalization consists of the following components: �� Shareholders’ equity excluding revaluation reserves and the remeasurement of defined benefit plans; �� Non-controlling interests and share options not yet exercised; �� Total financial leverage.
These are used primarily to purchase investments, as well as to fund benefit payments to policyholders, policy surrenders, operating expenses, and, if the subsidiary’s capital position so allows, to pay dividends to the holding.
Board and its Risk Committee. Aegon’s risk management function monitors and controls Aegon’s solvency position and ensures that risk taking is within Aegon’s risk tolerance levels.
Board and in particular by the Nominating Committee. An overview of the composition in 2013 is included in this report on pages 96 and 97. In 2013, the term of Mr. Shemaya Levy expired. He was reappointed for a new term of four years by the shareholders on May 15, 2013. On the same day shareholders approved the appointment of Mrs. Dona D. Young to the Board for a term of four years. In September 2013, Mrs. Karla M.H. Peijs announced her retirement from the Board on September 30, 2013.
Activities In 2013, discussions by Aegon’s Supervisory Board included the following issues: �� Strategy, including Aegon’s sustainability program, and business reviews; �� Acquisitions, divestments and restructuring of businesses; �� Preferred Share Amendment Plan; �� Executive Board and senior management succession planning; �� Executive remuneration; �� Governance and composition of the Supervisory Board; �� New product development; �� Customer centricity; �� Human resources, including talent development and results of the employee survey; �� Annual and quarterly results, dividend and Group Plan 20142016, including the 2014 budget, and the capital plan; �� Capital position and Solvency II; �� Enterprise risk management; �� Investor relations; �� Legal, regulatory and compliance issues; �� Accounting changes.
The four Committees are the: �� Audit Committee; �� Risk Committee; �� Nominating Committee; �� Compensation Committee.
Supervisory Board on the company’s risk management strategy and policies. Consequently, the Committee regularly reviews the company’s ERM framework, risk exposures and compliance with company risk policies.
In 2013 the Risk Committee convened five times, including one meeting in Washington with the Chief Risk Officer of
Annual accounts This Annual Report includes the annual accounts for 2013, prepared by the Executive Board, discussed by both the Audit
Antony Burgmans (1947, Dutch) Member of the Audit Committee Antony Burgmans is retired Chairman and CEO of Unilever N.V.
NV/SA. He is Vice-Chairman & Senior Independent Director of the Board of Directors of Unilever N.V. and Unilever PLC and a member of the Board of Directors of Baxter International
His current term ends in 2016. He is also Chairman of the
Board operates according to the principles of collective responsibility and accountability.
General Meeting may, in addition, bring forward a resolution to appoint someone not nominated by the Supervisory Board. Such a resolution also requires a two-thirds majority of votes cast representing at least one half of Aegon’s issued capital.
At January 1, 2012 (restated for IAS 19) 9,097 9,418 3,464 (979) (964) 4,720 24,756 14 24,770
Net increase / (decrease) in cash and cash equivalents 2) (3,766) 1,751 2,545
Impact of changes in accounting policies on the consolidated income statement
Remeasurement of defined benefit plans - - (1,085) (1,085) - - (979) (979)
Impact of changes in accounting policies on the consolidated cash flow statement reported) Change in accounting policy
The IFRS 9 project is to replace IAS 39 with a new standard. The project is divided into the following components: Classification and Measurement of Financial Instruments, Impairment and Hedge Accounting. The IASB recently has decided tentatively to defer the mandatory effective date to January 1, 2018. In addition, the IASB decided to reopen IFRS 9 in order to consider interaction with the insurance project as well as the US FASB’s classification and measurement model for financial instruments. For the Impairment component, the IASB issued an exposure draft proposing the recognition and measurement of a credit loss allowance or provision based on expected losses rather than incurred losses. On November 19, 2013, the IASB issued a new version of Hedge Accounting, which includes the new hedge accounting requirements. Macro hedging is decoupled from the hedge accounting component in order to avoid impact on the effective date or timing of the completion of the IFRS 9 project. IFRS 9 is expected to have a significant impact on the Group’s financial statements because it will likely result in a reclassification and remeasurement of Aegon’s financial assets.
Prior to January 1, 2013, Aegon's interests in joint ventures were recognized using proportionate consolidation, combining items on a line by line basis from the date the jointly controlled interest commences. Gains and losses on transactions between the Group and the joint venture were recognized to the extent that they were attributable to the interests of other ventures, with the exception of losses that were evidence of impairment and that were recognized immediately. The use of proportionate consolidation was discontinued from the date on which the Group ceases to have joint control.The new policy for interests in joint ventures is included in note 2.10.
The resulting exchange differences are recognized in the “foreign currency translation reserve”, which is part of shareholders’ equity.
2.6 Intangible assets a. Goodwill Goodwill is recognized as an intangible asset for interests in subsidiaries and joint ventures acquired after January 1, 2004 and is measured as the positive difference between the acquisition cost and the Group’s interest in the net fair value of the entity’s identifiable assets, liabilities and contingent liabilities. Subsequently, goodwill is carried at cost less accumulated impairment charges.
All tests performed within the Group are based on current estimates of all contractual future cash flows, including related cash flows from policyholder options and guarantees. A number of valuation methods are applied, including discounted cash flow methods, option pricing models and stochastic modeling. Aggregation levels are set either on geographical jurisdiction or at the level of portfolio of contracts that are subject to broadly similar risks and managed together as a single portfolio. Specifically, in the Netherlands and the UK the liability adequacy test is performed on a consolidated basis for all life and non-life business, whereas in the Americas it is performed at the level of the portfolio of contracts. To the extent that the tests involve discounting of future cash flows, the interest rate applied is based on market rates or is based on management’s expectation of the future return on investments. These future returns on investments take into account management’s best estimate related to the actual investments and, where applicable, reinvestments of these investments at maturity. The fair value of the assets carried at amortized cost is considered in determining any liability adequacy surplus or deficit.
The Group has issued share-based plans that entitle employees to receive equity instruments issued by the Group or cash payments based on the price of Aegon N.V. common shares. Some plans provide employees of the Group with the choice of settlement.
2.26 Premium income Gross premiums, including recurring and single premiums, from life and non-life insurance and investment contracts with discretionary participation features are recognized as revenue when they become receivable. Not reflected as premium income are deposits from certain products that are sold only in the United States and Canada, such as deferred annuities. For these products the surrender charges and charges assessed have been included in gross premiums.
IFRS 4 neither prohibits nor requires the deferral of policy acquisition costs, nor does it prescribe what acquisition costs are deferrable.
If the above assessment indicates that Aegon has power, it has been assessed whether Aegon has exposure or rights to variability of returns. The following items were assessed: �� General account investment of Aegon; �� Aegon’s investment held for policyholder; �� Guarantees provided by Aegon on return of policyholders in specific investment vehicles; �� Fees dependent on fund value (including, but not limited to, asset management fees); and �� Fees dependent on performance of the fund (including, but not limited to, performance fees).
The most significant unobservable input for these derivatives is the (projected) mortality development.
Property Databank. Valuations are mostly based on active market prices, adjusted for any difference in the nature, location or condition of the specific property. If such information is not available, other valuation methods are applied, considering the value that the property’s net earning power will support, the value indicated by recent sales of comparable properties and the current cost of reproducing or replacing the property. Discount rates used in the valuation of real estate reflect the risk embedded in the projected cash flows for the asset being valued. Capitalization rates represent the income rate for a real estate property that reflects the relationship between a single year’s net operating income expectancy and the total property price or value. For property held for own use, appraisers consider the present value of the future rental income cash flows that could be achieved had the real estate been let out.
The preferred method of obtaining the fair value of the fair value option bonds is the quoted price (Level I). In case markets are less liquid or the quoted prices are not available, an internal model is used, using parameters which are market observable (Level II). Aegon uses a discounted cash flow method including yield curves such as deposit rates, floating rate and 3-month swap rates. In addition,
Aegon's target ratio for the composition of its capital base is based on shareholders' equity excluding the revaluation reserve.
Moreover concentration of financial risks are measured in Aegon business planning cycle. As part of business planning, the resilience of
In periods of rapidly increasing interest rates, policy loans, surrenders and withdrawals may and usually do increase. Premiums in flexible premium policies may decrease as policyholders seek investments with higher perceived returns. This activity may result in
Asset Backed Securities (ABSs) - CDOs backed by ABS, Corp. Bonds, Bank loans 1,188 (51) 993 (86)
Residential mortgage-backed securities Aegon Americas, Aegon the Netherlands and Aegon UK hold EUR 5,461 million (2012: EUR 6,141 million) of residential mortgagebacked securities (RMBS), of which EUR 4,300 million (2012: EUR 4,979 million) is held by Aegon Americas, EUR 19 million
(2012: EUR 343 million). The gross unrealized losses in the banking sub-sector primarily reflect the size of Aegon’s holdings, low floating rate coupons on some securities, and credit spread widening since the time of acquisition due to the Sovereign debt crisis in Europe, residual impact from the U.S. financial crisis, and global economic uncertainty. Following the implementation of new, more stringent global legislation on bank capital and liquidity requirements, credit spreads in the sector have outperformed the broader corporate market in 2013. Decisive steps by EU leaders and world central banks continue to stabilize the euro and improve funding conditions for most banks. Globally, there remain pockets of concentrated risk on bank balance sheets, and ratings for some countries and banks remain under pressure, but the banking sub-sector has largely been strengthened and oversight increased.
The table below provides the length of time a below investment grade security has been in an unrealized loss and the percentage of carrying value (CV) to amortized cost.
DPAC amortization and guaranteed minimum benefits provisioning, while moderate scenarios may not. Aegon generally has positive income benefits from equity market increases and negative impacts from equity market declines as it earns fees on policyholder account balances and provides minimum guarantees for account values. Aegon added out-of-money options in its portfolio to provide additional protection for equity market declines.
Aegon’s liquidity management is based on expected claims and benefit payments rather than on the contractual maturities.
Aegon monitors and manages its underwriting risk by underwriting risk type. Attribution analysis is performed on earnings and reserve movements in order to understand the source of any material variation in actual results from what was expected. Aegon’s units also perform experience studies for underwriting risk assumptions, comparing Aegon’s experience to industry experience as well as combining Aegon’s experience and industry experience based on the depth of the history of each source to Aegon’s underwriting assumptions. Where policy charges are flexible in products, Aegon uses these analyses as the basis for modifying these charges, with a view to maintain a balance between policyholder and shareholder interests. Aegon also has the ability to reduce expense levels over time, thus mitigating unfavorable expense variation.
To further protect the longevity position of Aegon the Netherlands and combining this with protection for catastrophe mortality in the US, Aegon bought an additional longevity index derivative. This derivative will pay out in twenty-two years if some combination of higher than expected mortality rates in the United States and/or lower than expected mortality rates in the Netherlands persists over the next twenty years and, at that time, is expected to continue to do so. Payout of the derivative is defined based on a 'terminal present value', which represents the sum of 1) the cumulative payout to a predefined (synthetic) insured population over the next twenty years and 2) the remaining expected liability on this same population. The preceding sum is compared to amounts set at the moment of signing the contract to determine the actual payout.
Amortization of deferred expenses, VOBA and future servicing rights 830 83 295 120 - 1,328
Insurance contracts for account of policyholders 45,589 26,158 2,011 2,411 - - 76,169
Net fair value change on for account of policyholder financial assets at fair value through profit or loss 15,571 11,851 (2,133)
Fair value changes on economic hedges for which no hedge accounting is applied (108) (79) (117)
Staff’, have been granted the conditional right to receive Aegon shares if certain performance indicators are met and depending on continued employment of the individual employee to whom the rights have been granted. The shares were conditionally granted at the beginning of the year at the average share price on the NYSE Euronext stock exchange in Amsterdam during the period between
Staff” in accordance with new rules, guidelines and interpretations. Of these, the Capital Requirements Directive III (CRD III)
In 2013, 5,735,046 shares were conditionally granted (at target performance level) to participants in the 2013 Long Term Incentive
Refer to note 56 for detailed information on conditional shares and share options granted to the Executive Board.
New Markets - Central & Eastern Europe 48 101 - Other New Markets 27 29
The consideration amounted a total of EUR 353 million and the sale resulted in a book gain of EUR 102 million before tax.
Movements during the year in reinsurance assets relating to non­life insurance: 2013 2012
The inflow in 2012 is mainly a result of the proceeds of EUR 102 million on the sale of Aegon's interest in Prisma and the proceeds of EUR 190 million received from the exit from the partnership with Banca Civica, partly ofset by the aquisition of Liberbank and purchases of software. In 2011, the inflow was a result of cash received from the divestment of Transamerica Reinsurance and the sale of Guardian life in the United Kingdom.
EUR 2,250 million of which EUR 1,500 million related to the repurchase of the convertible core capital securities and EUR 750 million related to the premium attached to this repurchase. With these transactions Aegon completed the repurchase of all EUR 3 billion convertible core capital securities issued to the Dutch State in 2008.
Loss recognized as a result of liability adequacy testing 3 1
Aegon’s general account investments. 9 The first optional redemption date is March 2016; the legal maturity date is September 2092. Notes are fully collateralized by mortgage loans which are part of
The principal actuarial assumptions have an effect on the amounts reported for the defined benefit obligation. A change as indicated in the table below in the principal actuarial assumptions would have the following effects on the defined benefit obligation per year-end: Estimated approximate effects on the defined benefit obligation Demographic actuarial assumptions 10% increase in mortality rates (24)
No loans and receivables were designated at fair value through profit or loss.
Notes to the consolidated financial statements of Aegon N.V. Note 53 53 Offsetting, enforceable master netting arrangements and similar agreements The following table provides details relating to the effect or potential effect of netting arrangements, including rights of set-off associated with the entity's recognized financial assets and recognized financial liabilities.
On October 15, 2012, Vereniging Aegon exercised its option rights to purchase in aggregate 3,907,000 class B preferred shares at par value to mitigate dilution caused by Aegon’s issuance of shares on September 15, 2012, being the interim-dividend 2012 in the form of stock-dividend.
On March 15, 2011, Aegon repurchased 187.5 million of the convertible core capital securities. The total payment to the Dutch government on March 15, 2011 amounted to EUR 1.125 billion and included a premium of EUR 375 million.
Opinion with respect to the consolidated financial statements In our opinion, the consolidated financial statements give a true and fair view of the statement of financial position of Aegon N.V. as at
The Hague, the Netherlands, March 19, 2014 Ernst & Young Accountants LLP
6 Receivables Receivables from group companies and other receivables have a maturity of less than one year. Other receivables include an income tax receivable of EUR 15 million (2012: EUR 59 million).
The weighted average number of EUR 0.12 common shares for 2013 was 2,035,239,751 (2012: 1,907,382,542).
Board remuneration Detailed information on remuneration of active and retired members of the Executive Board including their share and share option rights, remuneration of active and retired members of the Supervisory Board along with information about shares held in Aegon by the members of the Boards is included in note 56 to the consolidated financial statements of the Group.
Remeasurement of defined benefit plans of group companies - - - 379 - - - - - 379
Transactions in 2012: Sale: 1 transaction, price EUR 3.52 - (9,533)
7. The company’s policy on reserves and dividends shall be determined and can be amended by the Supervisory Board, upon the proposal of the Executive Board. The adoption and thereafter each amendment of the policy on reserves and dividends shall be discussed and accounted for at the General Meeting of Shareholders under a separate agenda item.
Aegon, known as the Preferred Shares Voting Agreement before May 2013. 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 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
Committee. Following the amendment of the Articles of Association put into effect on September 13, 2005, this requirement does not apply in the event of a hostile change of control at the General Meeting of Shareholders of Aegon N.V., in which event Vereniging
As at December 31, 2013 Amounts in million EUR Cost1) Fair value Book value
Supervision Individual companies in the Aegon Group are each subject to solvency supervision in their respective home countries. Based on
Since the beginning of October 2009, Aegon has been subject to supplemental group supervision by the Dutch Central Bank in accordance with the requirements of the European Union’s Financial Conglomerate Directive. Supplemental group supervision pursuant to the Financial Conglomerate Directive includes supplementary capital adequacy requirements for financial conglomerates and supplementary supervision on risk concentrations and intra-group transactions in the financial conglomerate.
Aegon to establish reserves to fund these future guaranteed benefits when equity market returns do not meet or exceed these guarantee levels. Aegon´s reported results under International Financial Reporting Standards, as adopted by the European Union (IFRS), are also at risk if returns are not sufficient to allow amortization of deferred policyholder acquisition costs (DPAC), which may impact the reported net income as well as shareholders´ equity. Volatile or poor market conditions may also significantly reduce the demand for some of Aegon’s savings and investment products, which may lead to lower sales and net income. Deteriorating general economic conditions may again result in significant decreases in the value of Aegon´s equity investments. The equity market conditions experienced through 2013 led to a recognized impairment loss on equity securities held in general account of EUR 3 million (2012: EUR 8 million, 2011: EUR 10 million).
The profitability of Aegon’s spread-based businesses depends in large part upon the ability to manage interest rate spreads, credit spread risk and other risks inherent in the investment portfolio. Aegon may not be able to successfully manage interest rate spreads, credit spread risk and other risks in the investment portfolio or the potential negative impact of those risks. Investment income from general account fixed income investments for the years 2011, 2012 and 2013 was EUR 5.6 billion, EUR 5.7 billion and EUR 5.6 billion,
For the Americas, which primarily conducts its business in US dollars, total revenues and net income in 2013 amounted to EUR 12.6 billion and EUR 446 million, respectively. For the UK, which primarily conducts its business in UK pounds, total revenues and net income in 2013 amounted to EUR 8.7 billion and EUR 120 million, respectively. On a consolidated basis, these represented 71% of the total revenues and 58% of the net income for the year 2013. Additionally, Aegon borrows in various currencies to hedge the currency exposure arising from its operations. As of December 31, 2013, Aegon has borrowed or swapped amounts in proportion to the currency mix of capital in units, which was denominated approximately 53% in US dollars, 28% in euro, 14% in UK pounds and 5%
Since 2012, further to a decision by the European Court of Justice, our European units may no longer use gender-related factors to determine premiums and benefits under insurance policies.. We have not observed any negative financial or business impact through 2013 but there remains a risk of future adverse impact.
State and international financial services regulators to develop international capital, accounting and solvency regulatory standards for internationally active companies. The primary impact to Aegon USA of the Dodd-Frank Act and similar financial services reform legislation by other countries in which Aegon operates will be the Derivatives Reform part of the Dodd-Frank Act, which aims to increase transparency of derivatives and reduce systemic risk. Aegon USA entities will be considered Category 2 under the regulations and will be required to begin clearing derivative transactions as they are phased in over time, beginning with the four categories of interest rate swaps and two categories of indexed credit default swaps on June 10, 2013. In addition, Aegon USA will have new reporting, initial margins and variation margins obligations under the Dodd-Frank Act and its regulations. However, Aegon cannot predict how the regulations will affect the financial markets generally or how the regulations will affect Aegon’s operations or financial condition.
Corporate and individual income tax Residents of the Netherlands If a holder of Aegon common shares is a resident or deemed to be a resident of the Netherlands for Netherlands corporate income tax purposes and is fully subject to Netherlands corporate income tax or is only subject to Netherlands corporate income tax in respect of an enterprise to which Aegon common shares are attributable, income derived from Aegon common shares and gains realised upon the redemption or disposal of Aegon common shares are generally taxable in the Netherlands (at up to a maximum rate of 25%) under the
Certain “qualified dividend income” received by individual US holders is taxed at a maximum income tax rate of 20% in 2013 and subsequent years. Only dividends received from US corporations or from a “qualified foreign corporation” and on shares held by an individual US holder for a minimum holding period (generally, 61 days during the 121-day period beginning 60 days before the ex-dividend date) can qualify for this reduced rate. Aegon is eligible for benefits under the comprehensive income tax treaty between the Netherlands and the US; therefore, Aegon should be considered a “qualified foreign corporation” for this purpose. Accordingly, dividends paid by Aegon to individual US holders on shares held for the minimum holding period may qualify for a reduced income tax rate. Each US holder should consult their tax advisor regarding the applicable tax rate.
Financial asset is any asset that is: �� Cash; �� An equity instrument of another entity; �� A contractual right to receive cash or another financial asset from another entity or to exchange financial instruments with another party under conditions that are potentially favorable; or �� A contract that will or may be settled in the entity’s own equity instruments; and is �� 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.