Aegon N.V. may be referred to as ‘Aegon Group’ or ‘the Group’. For the purposes of this report, ‘member companies’ shall mean, with respect to Aegon N.V., those companies consolidated in accordance with Dutch legislation relating to consolidated accounts.
This organizational change is designed to accelerate growth, foster new business models and enable operational efficiencies.
Aegon is taking to prioritize the health and wellbeing of its employees and customers.
is to set hand over the baton to a successor tasked with leading the Company to the next stage of development. The Supervisory
With shareholder approval, Lard will build on the hard work done by Alex Wynaendts and his team. Alex has led the successful strategic and financial transformation of Aegon over the last 12 years. As a result, Aegon is now well-positioned for the next phase of development and to realize its full potential. Both Alex and the Supervisory Board agreed this to be the natural moment for him to hand over to a new CEO. I would like to express, also on behalf of the entire Supervisory Board, our sincere gratitude and appreciation to Alex for guiding Aegon through its major transformation and the great dedication he has shown to the Company, its employees and all its stakeholders.
Group (US, Canada); Origen Financial Services (UK); Futuready (Indonesia); Transamerica Ventures and Blue Square Re (Global).
Sources of revenues and earnings Aegon derives revenues and earnings from insurance premiums, investment returns, fees and commissions. Aegon is welldiversified across these sources of revenues and earnings which positively contributes to our ability to both pay attractive dividends and to invest in future growth.
Through BES, we seek to better understand the material opportunities and risks that affect our worldwide operations, including, but not limited to, these high impact themes: 1 Evolving regulations Opportunity Risk
Information security, data privacy and protection, and fraud prevention are essential for building customer trust and for delivering services that customers value and rely upon. We are subject to multiple regulations pertaining to data protection and stewardship within each geography in which we operate. These include, for example, the GDPR in the EU, the New York DFS Cybersecurity Rule, and new privacy legislation in California in the US. As Aegon, we are bringing values and practices learned from the implementation of these regulations to other jurisdictions where we have activities: e.g., to our e-commerce partnerships in Asia.
EUR 3.5 billion in the new-style PPI retirement solution, and EUR 67 billion on the life insurance balance sheet.
Our employee engagement score – at 67 – increased from 65 the previous year. In relation to customers, we welcomed 4.3 million new customers in 2019, a rate 13% higher than the previous year.
New life sales 861 820 5.0% New life sales were up mainly driven by The Netherlands on the back of a pension buy-outs and purchase of additional yearly pension increases by existing customers.
Environment We aim at creating a lasting contribution to a healthy environment through our investments.
To ensure that action on inclusion and diversity ambitions continues to gain momentum, targets have been included in the global CEO’s objectives and this approach has been replicated in other markets; for example, Aegon UK has included
capital position and capital generation. Before deciding on dividends, management will also assess prospects for financial performance. Our goal is to deliver sustainable dividend growth for our shareholders over time. Since 2012, we have increased dividends every year by either one or two cents – equivalent to a 48% increase over seven years.
Convocation General Meetings of Shareholders are convened by public notice at least 42 days before the meeting. The convocation states the time and location of the meeting, the record date, the agenda items, and the procedures for admittance to the meeting and representation at the meeting by means of a written proxy.
Meeting of Shareholders on May 15, 2020, it will be proposed to the shareholders to appoint Thomas Wellauer and Caroline
On May 17, 2019, Vereniging Aegon exercised its options rights to purchase in aggregate 1,773,680 common shares
Vereniging Aegon may cast one vote for every common share it holds and one vote only for every 40 common shares B it holds. In the event of a Special Cause, Vereniging Aegon may cast one vote for every common share and one vote for every common share B.
Appointing, suspending or dismissing Board members The General Meeting of Shareholders appoints members of both the Supervisory and Executive Boards, following nominations by the Supervisory Board. These nominations are binding providing at least two candidates are nominated. The General
Corien M. Wortmann-Kool (1959, Dutch)‍ Vice Chairman of the Supervisory Board
Companies, which was an insurance and asset management company at the time of her tenure. She was appointed to Aegon's Supervisory Board in 2013, and her current term will end in 2021.
The duties of the Supervisory Board with regard to the activities of members of the Executive Board are published in the Supervisory Board Charter, which is published on
Mr Friese will succeed Mr. Wynaendts as Chief Executive Officer of the Company.
Aegon. The Board visited local offices and liaised with employees in Spain, the Netherlands and the US. In addition, the Board was updated on the IFRS 9 and IFRS 17 developments, the Solvency
The Committee confirmed that all of its members qualified as independent according to Rule 10A-3 of the SEC, and it also confirmed that the Chairman of the Audit Committee, Ben van der
The Audit Committee was satisfied with the explanations provided by the Executive and Management Board, Internal Audit and PwC, and conclusions reached. Recurring items on the Audit
Internal Audit charter, quality assurance reviews, issue tracking and resolution, control environment, Information
In addition to the committee members, these meetings were attended in whole or in part by the CEO, the Global Head Human
In the current Supervisory Board composition, there are two female members out of six members in total (meeting the recent requirement under Dutch law that at least 30% of the positions should be filled by women and at least 30% by men). For the Executive Board and Management Board such balanced gender composition has not been met.
Meeting of Shareholders on May 17, 2019 with 99.53% of the votes in favor and 0.47% against:  The annual fixed fees for the Risk Committee membership became equal to the fixed fees for the Audit Committee membership. This increased the fixed fee for the Risk
EUR 5,000 to EUR 8,000.  The Committee attendance fee for all committees, except for the Audit Committee, were increased from EUR 2,000 to EUR 3,000. The Audit Committee attendance fee was already EUR 3,000.
Additionally, Aegon already structured this remuneration report in line with the draft European guidelines on the standardized presentation of the remuneration report.
th er n o n -fin an cial in fo rm atio n members and to strengthen the overall effectiveness of Aegon's corporate governance.
Dirk P.M. Verbeek (up to May 18, 2018) Fees 112 111 100 76 -
Shemaya Levy (up to May 19, 2017) Fees 101 95 105 - -
Leo M. van Wijk (up to May 20, 2015) Fees 100 - - - -
Board’s committees, their attendance and travel. There were no deviations from the policy.
of the annual base fee for Supervisory Board membership and any Supervisory Board committee membership, taking into account their function (i.e. Chairman, Vice-Chairman or regular members) and the fees for their actual attendance and travel during that quarter.
Netherlands, which provides life insurance, pensions and asset management (identity). The main operations are in the US, the
Annual General Meeting of Shareholders and have not changed in this Policy.
Board has to submit a proposal to the Shareholders to amend this Policy at a Shareholders’ Meeting.
Based on these criteria, the current peer group consists of the following 12 European Insurance companies: Ageas,
are paid. Before a deferred portion is paid, the Company’s Risk
C. Provisional variable compensation 2019 Subject to the adoption of the annual accounts at the General
Financial transformation Measures the progress of four transformation processes within the Finance function.
Succession planning Contains personal goals to further improve succession planning for senior management positions within the Finance function.
Darryl Button (up to Dec 1, 2016) Awarded and due 2,047 2,370 - - -
Alex Wynaendts Weight Performance indicators Performance period Aegon financial 10% Normalized Capital Generation 2 years (2019-2020) 1)
Personal 10% Sustainable Organization 1 year 10% Financial Strategy Execution 1 year 10% Finance Transformation 1 year
(66 2/3%) in Shares which must be held for 5 years after completion of the performance period (see also C.3.4). The pay-out in these restricted Shares is combined with prohibiting the Executive in this Policy from using personal hedging strategies or insurance which could undermine this long-term alignment of interests (see also E.2). Additionally, the
A.6 Temporary Derogation from the Policy As determined by the Dutch Civil Code, derogation from this
Compensation. This monthly fee is one-twelfth of the gross annual Cash Base Fee.
The Supervisory Board can adjust the deferred portion downwards before vesting, based on the findings of the mandatory Ex-Post Malus risk assessment. The ex-post assessment process and criteria are defined in the Material Risk
C.4 Pension Arrangements The Executive is entitled to Pension contributions that equal 40%
If the sum of the Defined Contributions to these plans in a calendar year is less than the pledged Pension contribution level of 40% of the gross annual Base Fee, the Executive receives the difference in an annual contribution for Pension purposes in November of that calendar year.
Variable Compensation award contribute to Aegon’s strategy, long-term interests and sustainability, within Aegon’s risk tolerance. Therefore the performance indicators are:  A mix of financial and non-financial performance indicators, with at least 50% weight allocated to the non-financial performance indicators in accordance with article 1:118.3 of the Dutch Financial Supervision Act;  A mix of unadjusted financial and risk-adjusted financial performance indicators, with a maximum weight for unadjusted financial indicators as defined in the Remuneration
Aegon is committed to doing business responsibly and in a sustainable way, for which the Executive is incentivized in this
Policy through the ESG performance indicator category (see also A.4):  ESG: Ensures a focus on the non-financial long-term value creation for Stakeholders and/or the society, related to
D.3 Calculation of Variable Compensation After completion of the performance year a comparison will be made between the predetermined target levels and the actual, realized performance.
performance indicators: Performance Indicators - Target Level and Performance Measurement Scale
Realized performance 0% From 50% to 80% 80% From 80% to 100% 100%
Total Assets;  Geographic scope: Preferably companies which operate globally;  Location: Headquarters based in Europe.
• Completion of internal risk assessment (SIRA, or Systematic Integrity Risk Assessment), and action items to address any gaps in performance
• Overall there is satisfactory progress with 69% of the business unit actions completed and an additional 9% of actions progressing within the deadline. Of the Group actions, 65% are completed and 9% are progressing within deadline. Thirteen action items were postponed to 2020. Carried-over actions constitute non-material items that do not pose regulatory or compliance risks, with targeted completion for early 2020.
Charitable Donations Standards • Covers Aegon’s objectives with regard to community investment, including priority areas, selection criteria, governance and approval
Aegon Integrated Annual Report 2019 87 Non-financial policies, procedures and outcomes
II rules (the absolute floor of the group solvency), which can be considered to be an MCR at group level. Although capital requirement entities that are not subject to solo supervision under Solvency II (such as entities in other financial sectors, non-financial entities, and regulated and non-regulated entities in third countries) are not directly subject to Solvency
Aggregation method for inclusion of these entities in the group calculation (as opposed to the Accounting Consolidation method, which is the default method under Solvency II).
Journal of the European Union. Most of the amendments have entered into force during the second half of 2019 and some as per January 1, 2020. The purpose of the 2018 review has been to review specific items of the SCR standard formula calculation in the Solvency II Delegated Regulation, in order to achieve a more proportionate and simplified application of the requirements, removal of technical inconsistencies and the removal of unjustified constraints to financing. Amongst others, the amendments relate to tiering requirements for subordinated liabilities as part of own funds and the Loss-
In November 2019, EIOPA has published a substantial consultation document in the context of the Solvency II 2020 review. Through the consultation process EIOPA expects to obtain input for its technical advice to the European
(G-SII), based on an assessment methodology developed by the International Association of Insurance Supervisors (IAIS).
Resolution of Insurers, Aegon will continue to update its ex ante group recovery plan (pursuant to the Dutch Act on Recovery
Bank Recovery and Resolution Directive Furthermore, to parts of the Aegon Group, in particular Aegon
Requirement (PCR) during the monitoring period. The purpose of the five-year monitoring period is to monitor the performance of the ICS over a period of time, and not the capital adequacy of IAIGs. Therefore, ICS results will not be used as a basis to trigger supervisory action and IAIGs are not expected to manage their business to the ICS. During the monitoring period, results based on ICS version 2.0, should we voluntarily decide to prepare these, might be privately disclosed to our group supervisor. From 2025 onwards, it is envisaged that local jurisdictions will formally enact the ICS, which is described as a minimum standard.
Management of capital The Company's overall capital management strategy is based on maintaining adequate Own Funds levels, capital quality and the use of leverage.
Annuity product, partly offset by payoffs on equity hedge programs. Furthermore, declining equity markets results in a reduction to the assets backing employee pension plan liabilities and a decrease in private equity and hedge fund investments. The asymmetry between the up and down shock is largely driven by the equity macro hedge program in Aegon 98 99CONTENTS
Americas, Aegon the Netherlands and Aegon UK due to the higher liability valuation since longevity is only partially hedged. Higher longevity also increases the SCR requirements held by these units. Aegon the Netherlands’ sensitivity to longevity reduced marginally over the year due to two offsetting impacts – reduction in sensitivity due to the execution of the longevity reinsurance transaction with Canada Life
Regulation, which includes grandfathered Tier 1 Own Funds instruments. Based on agreements with its supervisory authorities, Aegon applies a fungibilty and transferability restriction with respect to charitable trusts within Aegon
th er n o n -fin an cial in fo rm atio n subordinated and senior debt. Aegon's total capitalization consists of the following components:  Shareholders’ equity, excluding revaluation reserves and cash flow hedge reserves, based on IFRS as adopted by the EU;  Non-controlling interests and Long Term Incentive Plans not yet vested; and  Total financial leverage.
to the consolidated financial statements. These LOCs have been provided by third parties for the benefit of the affiliated company whose liabilities are reinsured. Existing captive structures are continually monitored and may be re-financed to achieve financial goals.
Aegon Integrated Annual Report 2019 104 105 Capital and liquidity management
The identified risk categories are financial risk, underwriting risk and operational risk. Specific risk types are identified within these risk categories. The risk universe captures all known material risks to which Aegon is exposed. These risks, internal or external, may affect the Company's operations, earnings, share price, value of its investments, or the sale of certain products and services.
In the context of Aegon's risk strategy, a risk appetite is set for the three identified risk categories (see table below).
Information security risk Information security risk has been recognized by Aegon as an important operational risk. Aegon's global information security program is intended to establish security controls that safeguard data, technology and operations, as well as activities outsourced to third parties. Aegon recognizes the need to continually strengthen its existing security control environment and preventative tooling as new cyber threats and exposures emerge.
Committee (SBRC);  The Executive Board and the Management Board;  The Group Risk & Capital Committee (GRCC) and its subcommittees; and  The Regional Risk & Capital Committees.
Oxley Act and Solvency II). Aegon's control activities should assure an adequate level of internal control over
Lines of defense Aegon's risk management structure is organized along three
which stipulates that from January 2020 only BMR compliant benchmarks may be used within the EU.
th er n o n -fin an cial in fo rm atio n management and banking activities. Despite current uncertainties on how the transition from IBORs to alternative benchmarks will be managed, it is widely acknowledged that IBOR benchmarks impact financial products and contracts, including among others derivatives, corporate bonds, structured debt products, deposits and mortgages.
Relevant facts and circumstances relating to the consolidated financial position on December 31, 2019, were assessed in order to reach the going concern assumption. The main areas assessed are financial performance, capital adequacy, financial flexibility, liquidity and access to capital markets, together with the factors likely to affect Aegon’s future development, performance and financial position. Commentary on these is set out in the 'Capital and liquidity management’, ‘Risk management’,
Borrowings including subordinated and trust pass-through securities 11,650 13,583 14,532 14,076 13,361 1 Amounts have been restated to reflect voluntary changes in accounting policies related to liability adequacy testing that was adopted by Aegon effective
Number of employees, including agent employees 8.824 3.548 3.135 2.837 9.520 6.344 1.464 390 26.543
Czech Republic and Slovakia.  In Asia, underlying earnings before tax improved by 7%
 Results 2019 Americas  Results 2019 Americas Results of operations - Americas
Net income The net income amounted to USD 1.3 billion in line with underlying earnings before tax, as gains from fair value items and realized gains on investments were offset by other charges and income taxes. Underlying earnings before tax in 2019 decreased by 12% compared with 2018 to USD 1.3 billion. Results on fair value items amounted to a gain of USD 304 million in 2019, which was primarily related to:  The gain in fair value investments amounted to USD 154 million, mainly driven by a USD 181 million mark-to-market gain from valuation updates related to accepting an offer to sell the Pyramid building complex in San Francisco, partly offset by alternative investments underperformance and the impact of credit spreads on derivatives.
compared with 2018 to USD 1.3 billion caused by lower fee income in Retirement Plans and Variable Annuities due to net outflows, product exits in the Accident & Health business, investments in the business to support growth and improve customer experience, and the impact of unfavorable economic movements on the Life earnings.
 Latin America improved underlying earnings before tax from a loss of USD 2 million in 2018 to a profit of USD 15 million in 2019, reflecting growth and a more attractive business mix with higher product margins from the Mongeral Aegon Group joint venture in Brazil. A portion of the increase was also related to the strategic decision to wind down the loss-making
Net income Net income amounted to EUR 486 million in 2019 compared with EUR 777 million in 2018, as higher underlying earnings before tax, lower other charges and higher gains on investments were offset by negative fair value items. The loss on fair value items was caused by the LAT shortfall in the Netherlands, partly offset by fair value gains on derivatives, a gain on the guarantee provision and real estate revaluations.
& Health insurance increased by 33% compared with 2018 to EUR 48 million in 2019, resulting from higher sales in Spain following the launch of a new accidental death and disability product as well as a successful marketing campaign for health products. New premium production in general insurance increased by 7% compared with 2018 to EUR 129 million in 2019, driven by business growth in Spain.
Accident and health insurance premiums 101 111 (8) 91 94 (3)
Net underlying earnings 102 113 (10) Tax on underlying earnings 37 39 (3)
Amounts in EUR million (except per share data) Note 2019 2018 2017
Income before share in profit / (loss)‍ of joint ventures, associates and tax 1,607 565 2,221
Net income / (loss) recognized in the income statement - 744 - - - - 744 1 744
Adjustments of non-cash items (35,261)‍ 12,718 (23,970)‍ Insurance and investment liabilities 3,750 1,989 (613) Insurance and investment liabilities for account of policyholders 26,512 (21,751) 12,988 Accrued expenses and other liabilities 352 (2,384) 309 Accrued income and prepayments (1,056) 709 (1,797) Changes in accruals 29,557 (21,437)‍ 10,887 Purchase of investments (other than money market investments) (40,014) (31,279) (32,057) Purchase of derivatives (214) (1,525) 752 Disposal of investments (other than money market investments) 40,187 29,192 35,512 Disposal of derivatives 2,880 (597) (878) Net purchase of investments for account of policyholders 7,605 10,819 8,869 Net change in cash collateral (332) 1,029 (455) Net purchase of money market investments 1,089 823 (659) Cash flow movements on operating items not reflected in income 11,200 8,462 11,082 Tax (paid)/ received (18) (9) 173
Net increase / (decrease)‍ in cash and cash equivalents 2)‍ 3,486 (2,317)‍ (125)‍
2 Significant accounting policies 2.1 Basis of presentation The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS-EU) and with Part 9 of Book 2 of the Netherlands Civil Code.
lease liabilities with the accompanying lease assets. From a lessor perspective, IFRS 16 substantially carries forward the lessor accounting requirements under IAS 17.
Items that may be reclassified to profit or loss: Gains / (losses) on revaluation of available-for-sale investments (2,138) (4) (2,142) 1,283 93 1,376
Impact of voluntary changes in accounting policies on the consolidated statement of financial position Note
Cash and cash equivalents, deposits with financial institutions, and receivables all pass the SPPI test and are held at amortized cost, whereby the amortized cost is assumed to approximate fair value due to the short-term nature of the assets. For movement schedules of these financial assets, refer to respective notes.
17 of June 2019, and in light of the criteria for assessing them, any such potential amendments could take a year to finalize. A final
As no recent death claims with large sum insured have occurred prior to 2020, the impact of this policy change on shareholders’ equity per January 1, 2020 is not significant.
c. Future servicing rights On the acquisition of a portfolio of investment contracts without discretionary participation features under which Aegon will render investment management services, the present value of future servicing rights is recognized as an intangible asset. Future servicing rights can also be recognized on the sale of a loan portfolio or the acquisition of insurance agency activities.
A financial asset is derecognized when the contractual rights to the asset’s cash flows expire or when the Group retains the right to receive cash flows from the asset but has an obligation to pay any received cash flows in full without delay to a third party and either: has transferred the asset and substantially all the risks and rewards of ownership, or has neither transferred nor retained all the risks and rewards but has transferred control of the asset. Financial assets of which the Group has neither transferred nor retained significantly all the risk and rewards and retained control are recognized to the extent of the Group’s continuing involvement.
 Hedge accounting is not discontinued during the period of IBOR-related uncertainty solely because the retrospective effectiveness falls outside the required 80-125% range.
Aegon the Netherlands, as required locally, adjusts the outcome of the liability adequacy test for the difference between the fair value and the book value of the assets that are measured at amortized cost in the statement of financial position. Mortgage loans is the primary asset class for which the difference between the fair value and the book value of assets impacts the LAT. For details on the fair value (measurement) of Aegon's assets and liabilities, please refer to note 44 Fair value.
During 2019, Aegon implemented actuarial assumption and model updates resulting in a net EUR 196 million charge to income before tax (2018: EUR 121 million charge). Refer to note 5 Segment information for further details.
lower interest rates and declining equity markets) may happen simultaneously which can lead to more severe combined impacts and may not be equal to the sum of the individual sensitivities presented in the disclosure.
EUR 111 million (2018: EUR 148 million). The DPAC and VOBA balances for these products in the United States amounted to EUR 2.7 billion at December 31, 2019 (2018: EUR 2.6 billion).
Aegon group level long-term counterparty exposure limits are as follows: Aegon Integrated Annual Report 2019
Past due and / or impaired assets 108 1,346 277 25 - - - 1 277 26
Credit risk concentrations – Government bonds per country of risk 2019 Americas
As of December 31, 2019, there are EUR 10,493 million (December 31, 2018: EUR 4,370 million) of gross unrealized gains and
During periods of sustained low interest rates, Aegon may not be able to preserve margins as a result of minimum interest rate guarantees and minimum guaranteed crediting rates provided on policies. Also, investment earnings may be lower because the interest earnings on new fixed-income investments are likely to have declined with the market interest rates. Mortgage loans and redeemable bonds in the investment portfolio are more likely to be repaid as borrowers seek to borrow at lower interest rates and Aegon may be required to reinvest the proceeds in securities bearing lower interest rates. Accordingly, net income declines as a result of a decrease in the spread between returns on the investment portfolio and the interest rates either credited to policyholders or assumed in reserves.
The exchange rates for US dollar and UK pound per euro for each of the last five year ends are set forth in the table below: Aegon Group companies' foreign currency exposure from monetary assets and liabilities denominated in foreign currencies is not material.
Net fair value change on borrowings and other financial liabilities 10 7 6 -
 Net foreign currency gains and (losses) are reported as part of the respective line in note 10.  Change in valuation of liabilities for insurance contracts is reported as part of the respective line in note 12.  Change in valuation of liabilities for investment contracts is reported as part of the respective line in note 12.  Policyholder claims and benefits - Other are reported as part of the 'Other' line in note 12 and is related to policyholder tax.  Commissions and expenses include: 1) Restructuring charges of EUR 220 million (2018: EUR 279 million charge, 2017: EUR 116 million charge) which are reported as part of Employee and Administration expenses lines in note 14; 2) Amortization of deferred expenses of EUR 32 million income (2018: charge of EUR 67 million, 2017: income of EUR 285 million) which is reported as part of the respective line in note 14. This is offset against realized gains and losses and impairments on financial investments; 3) Amortization of VOBA and future servicing rights of EUR 5 million charge (2018: charge of EUR 20 million; 2017: income of EUR 94 million) which is reported as part of the respective line in note 14. Commissions and expenses include a DPAC/
 Impairment (charges) reversals include: 1) Impairment charges and reversals on financial assets, excluding receivables of EUR 60 million charge (2018: EUR charge of 41 million, 2017: charge of EUR 42 million) as shown in note 15; 2) Impairment charges and reversals on non-financial assets and receivables of EUR 109 million charge (2018: EUR 19 million charge; 2017: EUR 1 million reversal) reported as part of the respective line in note 15.
Amortization of deferred expenses, VOBA and future servicing rights 852 25 119 52 196 24 - - - 1,072
Off-balance sheet investments third parties 204,184 3,339 106,347 5,851 115,537 2,818 149,197 - (774) 470,963
Financial assets at fair value through profit or loss 100,002 26,846 74,001 1,200 102,047 121 50 123 (5) 202,339
Other charges in 2018 of EUR 375 million include the gross settlement amount of a class action lawsuit regarding certain monthly deduction rate adjustments on universal life insurance policies and other related plaintiff and administration fees. The settlement relates to a block of around 70,000 universal life policies on which Transamerica raised the monthly deduction rates in 2015 and 2016.
Derivatives for general account Derivatives not designated in a hedge 10,027 6,737 10,277 6,367
As a result, only the net accounting ineffectiveness has an impact on the net result.
Derivatives designated as cash flow hedges Aegon has entered primarily into interest rate swap agreements that effectively convert certain variable-rate assets and liabilities to a fixed-rate basis in order to match the cash flows of the assets and liabilities within Aegon’s portfolio more closely. These agreements involve the payment or receipt of variable-rate interest amounts in exchange for fixed-rate interest amounts over the life of the agreement without the exchange of the underlying principal amounts. Aegon hedges its exposure to the variability of future cash flows from the interest rate movements for terms up to 25 years for hedges converting existing floating-rate assets and liabilities to fixed-rate assets.
Aegon received a distribution of its share of the assets and liabilities. As a result, the investment properties, being the main asset class in the fund, were recognized as part of investments in real estate of Aegon.
Net assets of joint venture excluding goodwill 3,602 2,848 857 681
Group share of net assets of joint venture, excluding goodwill 1,159 1,001 445 352
The value in use calculations were based on business plans covering a period of five years, pre-tax discount rate of 8.2%, post-tax discount rate of 8.1%, and terminal growth rate at 2%. The goodwill arises mainly from new customers, future software platform developments, synergies, and assembled workforce.
Net (gains) / losses transferred to income statement (412) - (97) (509)
EUR 200 million 6.0% Annually, July 21 Called in 2018 - - 200 1 The coupon of the USD 250 million junior perpetual capital securities is reset each quarter based on the then prevailing three-month LIBOR yield plus a spread of 87.5 basis points, with a minimum of 4%.
Fixed subordinated notes 1 Issued by a subsidiary of, and guaranteed by Aegon N.V.
Aegon the Netherlands partially hedges and reinsures the risk of future longevity increases in the Netherlands related to a part of its insurance liabilities.
Guarantee reserves increased by EUR 1,937 million in 2019 (2018: increase of EUR 1,081 million) to EUR 9,645 million (2018: EUR 7,708 million).
Other Included in borrowings is EUR 461 million relating to borrowings measured at fair value (2018: EUR 536 million). For the year 2019,
USA in 2019 or 2018. However, with the Aegon N.V. Management Board approval of a proposal from Transamerica Corporation,
Transamerica Corporation, or the Compensation Committee of the Board of Directors has the full power and discretion to apply all of the plan’s provisions, including such responsibilities as, but not limited to, interpret the plan provisions, to make factual determinations under the plan, to determine plan benefits, and to comply with any statutory reporting and disclosure requirements.
funds the benefit payments or premium payments of the post-retirement health care plans from its general account assets. The postretirement health benefit liability amounted to EUR 217 million (2018: EUR 210 million).
Financial actuarial assumptions 100 basis points increase in discount rate (417) (351)
25 basis points increase in indexation 194 167 25 basis points decrease in indexation (177) (152)
Excess of Assets over Liabilities 14,861 14,065 Availability adjustments 4,446 4,326
Fixed Charge Coverage 7.7x 8.2x 1 Other equity instruments that are denominated in foreign currencies are, for purpose of calculating hybrid leverage, revalued to the period-end exchange rate. 2 Non-controlling interests are disclosed in the statement of financial position. 3 Senior debt for the gross financial leverage calculation also contains swaps for an amount of EUR (7) million (2018: EUR (1) million). 4 To align closer to definitions used by peers and rating agencies, Aegon has retrospectively changed the definition of adjusted shareholders’ equity used in calculating the gross financial leverage ratio. Shareholders’ equity will no longer be adjusted for the remeasurement of defined benefit plans. All figures, including comparatives, are based on the new definition, unless stated otherwise.
1 Distributable items under Dutch law; note that Solvency II ratios also possibly restricts the distribution of dividends. 2 The legal reserves in respect of the foreign currency translation reserve (FCTR), group companies and the positive revaluations in the revaluation reserves, cannot be freely distributed.
fo r in st ru m en ts h el d at D
Private loans - held at amortized cost 4,487 - 65 5,094 5,159
Available-for-sale shares include shares in a Federal Home Loan Bank (FHLB) for an amount of EUR 91 million (2018: EUR 176 million), which are reported as part of the line-item Net asset value. A FHLB has implicit financial support from the United States government.
Aegon’s valuation policy utilizes a pricing hierarchy which dictates that publicly available prices are initially sought from indices and third-party pricing services. In the event that pricing is not available from these sources, those securities are submitted to brokers to obtain quotes, the majority of which are non-binding. As part of the pricing process, Aegon assesses the appropriateness of each quote (i.e. as to whether the quote is based on observable market transactions or not) to determine the most appropriate estimate of fair value.
Borrowings Borrowings designated as at fair value through profit or loss includes financial instruments that are managed on a fair value basis together with related financial assets and financial derivatives (refer to note 37 Borrowings).
Guarantees include those guarantees associated with the sale of investments in low-income housing tax credit partnerships in the United States, which mostly can be called upon immediately. Standby letters of credit amounts reflected above are the liquidity commitment notional amounts. In addition to the guarantees shown in the table, guarantees have been given for fulfillment of contractual obligations such as investment mandates related to investment funds.
th er n o n -fin an cial in fo rm atio n 46.1 Transferred financial assets that have not been derecognized in their entirety The following table reflects the carrying amount of financial assets that have been transferred to another party in such a way that part or all of the transferred financial assets do not qualify for derecognition. Furthermore, it reflects the carrying amounts of the associated liabilities.
On May 19, 2017, Vereniging Aegon exercised its options rights to purchase in aggregate 1,979,260 common shares B at fair value of a common share B (being 1/40th of the market value of a common share in the capital of the Company at the time of issuance)
Interests in Aegon N.V. held by active members of the Executive Board Shares held in Aegon at December 31, 2019 by Mr. Wynaendts amount to 544,914 (2018: 494,779) and by Mr. Rider to 42,972
Aegon Sony Life Insurance Co. and SA Reinsurance Ltd., to partner Sony Life. The proceeds of the sale amounted to EUR 153 million and the book gain amounted to EUR 51 million.
R ev al u at io n ac co u n t
Issuance and purchase of treasury shares - - - - - (86) - 56 - (30)
Issuance and redemption of other equity instruments - - - - - (81) - - - (81)
Le g al r es er ve s g ro u p c o m p an ie s
The company financial statements comprise:  the company statement of financial position as at December 31, 2019;  the company income statement for 2019; and  the notes to the financial statements, comprising the accounting policies applied and other explanatory information.
We used our professional judgment to determine overall materiality. Consistent with prior years, we used 5% of a three-year average of income before tax.
We assessed the design and tested the operating effectiveness of internal controls related to the valuation of Level 3 debt securities and investments in real estate, including controls over the development of the model and significant unobservable inputs, as well as management’s determination and approval of assumptions and methodologies used in model-based calculations and real estate appraisals, controls over data integrity and change management for internally operated valuation models and management’s review of valuations provided by external experts or data vendors. Based on this work we found that we, to the extent relevant for our audit, could rely on these controls.
Report on other legal and regulatory requirements Our appointment We were initially appointed as auditors of Aegon N.V. by the Supervisory Board following the passing of a resolution by the shareholders at the annual meeting held on 15 May 2013. We are the independent auditor for a total period of 6 years.
Standards on Auditing, ethical requirements and independence requirements. Our audit consisted, among other things of the following:  Identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error, designing and performing audit procedures responsive to those risks, and obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the intentional override of internal control.
Board, subject to the approval of the Supervisory Board, shall make a proposal for that purpose. A proposal to pay a dividend shall be dealt with as a separate agenda item at the General Meeting of Shareholders; 4. The Executive Board may, subject to the approval of the Supervisory Board, make one or more interim distributions to the holders of common shares and common shares B; 5. Distributions are made in accordance with the principle set forth in article 4 of the Articles of Association of Aegon N.V. that the financial rights of a common share B are one fortieth (1/40th) of the financial rights of a common share; 6. The Executive Board may, subject to the approval of the Supervisory Board, decide that a distribution on common shares and common shares B shall not take place as a cash payment but as a payment in common shares. Alternatively, it may decide that holders of common shares and common shares B shall have the option to receive a distribution as a cash payment and/or as a payment in common shares, out of the profit and/or at the expense of reserves, provided that the Executive Board is designated by the General
Exercise option right common shares B - May 2019 - 1,773,680
Dividends from and capital contributions to business units Aegon received EUR 1.2 billion of dividends from its business units during 2019 from the Americas, United Kingdom, asset management, Southern & Eastern Europe and Asia. Aegon spent EUR 0.4 billion on capital contributions, mainly on Spain and the Netherlands.
Management and Southern & Eastern Europe. Capital contributions of EUR 1.1 billion were paid to Aegon’s businesses, mainly to the Netherlands.
Column A Column B Column C Column D Column E Column F Segment
Aegon in the US Transamerica is one of the leading life insurance companies in the United States, and the largest of Aegon's operating units worldwide.
Aegon employs a variety of distribution models to help customers access its products and services. These include working through third party financial professionals, retail producers and agents, and Transamerica registered investment advisors.
Aegon USA's primary insurance subsidiaries are:  Transamerica Life Insurance Company;  Transamerica Financial Life Insurance Company; and  Transamerica Premier Life Insurance Company.
investment advisor representatives, offers insurance, annuities, mutual funds, retirement plans and advisory account solutions. There are approximately 43,000 independent insurance agents associated with WFGIA in the United States and its affiliated insurance agency operating in Canada. There are approximately 1,700 insurance agents associated with TAN. TAN provides the same life and health products as the brokerage channel, with a focus on middle and emerging affluent markets. The TAN agent field is comprised
Index universal life insurance IUL insurance provides permanent death benefit protection and cash value accumulation with flexible premium payments. What distinguishes it from other types of permanent life insurance is the way in which interest earnings are credited. Net premiums may be allocated to either a fixed account or indexed accounts. Indexed accounts credit interest based in part on the performance of one or more market indices. The credited interest is based on the index, but with a floor and a cap. IUL offers both market-paced growth potential in the indexed accounts and downside protection. It is an alternative to traditional UL - for which interest is credited at a fixed rate - and VUL, in which the cash value is directly exposed to ups and downs of the market. Long-term care riders and other living benefit riders are available on IUL.
In individual life insurance, leading competitors include Pacific Life, Lincoln National, Prudential Financial, John Hancock, National Life,
Nationwide, and AIG. Mutual of Omaha is the primary competitor for sales of individual long-term care insurance through the brokerage channel. Competitors for supplemental health include a wide range of companies and company types based on the nature of the coverage including Aflac, MetLife, Colonial Life, Allstate, Unum, and Guardian Life.
Aegon USA's largest insurance companies are domiciled in the State of Iowa, and the Iowa Insurance Division exercises principal regulatory jurisdiction over those companies1. This regulation includes implementation and enforcement of standards of solvency, adequacy of reserves and capital, and reinsurance.
Aegon the Netherlands' primary subsidiaries are:  Aegon Bank N.V.;  Aegon Hypotheken B.V.;  Aegon Levensverzekering N.V.;  Aegon Cappital B.V.;  Aegon Schadeverzekering N.V.;  Aegon Spaarkas N.V.;  TKP Pensioen B.V.;  Nedasco B.V.;  Salus Holding B.V.
Property and Casualty Aegon the Netherlands has focused exclusively on retail lines in general insurance since 2017, offering products in the segments of property, motor, travel, legal assistance, pet insurance, injury and private liability claims. The ambition for the P&C retail segment is to provide the best digital servicing in the Dutch market by 2022, while building long-lasting relationships with customers.
Bank N.V. is subject to Basel III requirements in the CRR and the CRD IV, as implemented in the Netherlands in the Wft. CRD IV and
Aegon UK encounters different competition in each of its core markets but is unique in the way it supports intermediaries wishing to operate across channels providing an end-to-end customer experience.
In the workplace market, Aegon UK competes with the likes of Aviva and Willis Towers Watson to provide employee benefits, engagement and scheme governance.
In addition, Aegon UK uses the Matching Adjustment in the calculation of the technical provisions for its annuities, and uses the Volatility Adjustment in the calculation of the technical provisions for the With-Profits business with investment guarantees.
(mainly accident, home and commercial multi-risk) products are sold by Aegon Santander Portugal Non-Life Insurance Company. Both entities are joint venture insurance entities, owned 51% by Aegon Spain and 49% by Santander Totta Seguros, S.A. respectively.
Aegon operates in India through its joint venture life insurance company, Aegon Life Insurance Company Limited (Aegon Life), since 2008, and its current joint venture partner is Bennett, Coleman & Co. Ltd. (BCCL). The joint venture follows a digitally focused direct-toconsumer strategy.
Securities and Investments Commission in Australia, and the Insurance Authority in Hong Kong.
Governmental action in the United States, the Netherlands, the United Kingdom, the European Union and elsewhere to address any of the above may impact Aegon’s businesses. Aegon cannot predict the effect that these or other government actions as well as actions by the European Central Bank (ECB) or the Federal Reserve may have on the financial markets or on Aegon’s businesses, results of operations, cash flows and financial condition.
Equity risk 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.
Perpetual Contingent Convertible Securities (or other securities that permit or require Aegon to satisfy its obligations by issuing common shares)‍ that Aegon may issue could influence the market price for Aegon’s common shares.
Adverse market and economic conditions can be expected to result in changes in the competitive landscape. Financial distress experienced by financial services industry participants as a result of weak economic conditions and newly imposed regulation may lead to acquisition opportunities. Aegon’s ability or that of Aegon’s competitors to pursue such opportunities may be limited due to lower
Prudential regulatory requirements such as with respect to the calculation of technical provisions, capital requirements, the eligibility of own funds as such and the regulatory treatment of investments may change, which could require Aegon to increase technical provisions, hold higher amounts of regulatory capital and subject it to more stringent requirements with respect to investments and/or own funds. Important examples include changes to applicable capital requirements by the European Union and/or EIOPA, the National Association of Insurance Commissioners (NAIC) in the US or US state regulators or local regulators in other jurisdictions in which Aegon’s subsidiaries operate. Aegon cannot predict specific proposals that might be adopted, or what impact, if any, such proposals or, if enacted, such laws, may have on its businesses, results of operations, or financial condition.
might have an impact on Aegon’s capital position, as calculated under Solvency II group requirements and/or the manner in which
With regard to the before described compliance and reporting tax risks, controls are in place to mitigate the risk exposure. The risk response depends on the type of risk, likelihood and impact analysis and chance of repetition and reputation damage. Controls are assessed on design and operational effectiveness (Risk Control Self-Assessment).
Various supranational institutions, central banks, regulators, benchmark administrators and industry working groups play a role in the benchmark reform and the preparation for the replacement of IBORs. At this moment there is still a lot of uncertainty around liquidity development, and the timetable and mechanisms for implementation, including application of spread adjustments to the alternative reference rates. Accordingly, it is not currently possible to determine whether, or to what extent, any such changes would affect Aegon. However, the implementation of alternative reference rates may have a material adverse effect on Aegon’s business, financial condition, customers and operations.
Material differences between Dutch law and US law with respect to the items above Reference is made to the paragraph ‘Differences between Dutch and US company laws’ included in the Corporate Governance section of this Annual Report (see page 40).
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 Dutch corporate income tax purposes and is fully subject to Dutch corporate income tax or is only subject to Dutch corporate income tax in respect of an enterprise to which Aegon common shares are attributable, income derived from Aegon common shares and gains realized 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 Dutch
This income and these gains are subject to Dutch corporate income tax at up to a maximum rate of 25%.
Non-residents of the Netherlands No gift or inheritance tax will arise in the Netherlands in respect of the acquisition of Aegon common shares by way of a gift by, or as a result of the death of, a holder that is neither a resident nor deemed to be a resident of the Netherlands for the purposes of the Dutch Gift and Inheritance Tax Act 1956. However, inheritance tax will be due in the case of a gift of Aegon common shares by, or on behalf of, a holder who at the date of the gift was neither a resident nor deemed to be a resident of the Netherlands for the purposes of the Dutch Gift and Inheritance Tax Act 1956, but such holder dies within 180 days after the date of the gift, and at the time of his or her death is a resident or deemed to be a resident of the Netherlands for the purposes of the Dutch Gift and
Initial public offerings, market making and intraday trading would not be taxable. The tax rate would be no less than 0.2%.
Total employment costs EUR 2.1 billion EUR 2.1 billion 4.3% EUR 2.2 billion
Taxes collected on behalf of others EUR 2.45 billion EUR 2.16 billion NA EUR 2.22 billion
Total per unit revenue (EUR million) (net/market) 0.6 0.6 (7.8%)‍ NM
NPS coverage Customer centricity NPS coverage refers to the percentage of customer base where we receive feedback from our customers through relational NPS surveys. Subsequently, we use relational NPS metrics for steering purposes.
Reference tables International Integrated Reporting Council (IIRC)‍ framework Table below shows Aegon’s compliance with the IIRC’s IR framework. For more information, see www.integratedreporting.org.
Task Force on Climate-related Financial Disclosures (TCFD)‍ Introduction Climate change represents one of the most significant challenges for society, the economy and financial institutions. Mitigating climate change and reducing greenhouse gas (GHG) emissions is a major global challenge. Aegon believes that governments, companies and investors have a responsibility to mitigate the impacts of a changing climate and facilitate a transition to a climate-resilient economy.
For our life insurance business, most of our liabilities are exposed to mortality and morbidity rates, including both the current level of these rates and the uncertainty around how they will develop over the coming decades. An important driver when assessing the value of our liabilities is how past increases in longevity are extrapolated into the future. Climate change will play a role in this, however there are many other factors that are expected to be more immediately impactful, for example: medical advancements, limits to human biology and changes in life style.
c h a n g e a g a in st cl im a te -u n in fo rm e d b a se li n e
Contribution to target 3.4 • Cover for customers facing chronic illnesses, including diabetes and cancer (page 24, 25) • Investment in care homes for the elderly in UK and the Netherlands (page 29) • Support for research into chronic illnesses, including cancer, heart diseases and
Alzheimer’s (page 34) • Exclusion of tobacco from investments to help address health concerns over smoking
Assets held by long-term employee benefit funds are part of plan assets. These are assets (other than non-transferable financial instruments issued by the reporting entity) that:  Are held by an entity that is legally separate from the reporting entity and exists solely to pay or fund employee benefits; and  Are available to be used only to pay or fund employee benefits and are not available to the reporting entity’s own creditors.
Business combination is the bringing together of separate entities or operations of entities into one reporting entity. This can be realized through a purchase transaction or by means of a merger. A business combination involving entities (or operations of entities) under common control is a business combination in which all of the combining entities (or operations of entities)