Aegon N.V. is referred to in this document as ‘Aegon’, or
Aegon’s strong operating performance in 2014 was underpinned by the progress we made to better understand and connect with our customers, together with our continued drive to be a leader in our chosen markets. Our work as a company is inspired by our purpose to help people take responsibility for their financial future, and I am proud of how the hard work, creativity and professionalism of Aegon’s 28,000 employees are enabling us to become a truly customer-centric company.
Aegon’s employees are our best source of ideas and our most important resource to connect with customers. Empowering colleagues to enable them to fulfill their roles to the very best of their abilities – such as through additional training and new resources – is therefore every bit as important as investment in other parts of the Company. Over the last 12 months, we have also continued to focus on fostering a culture in which trust, responsibility and innovation are actively encouraged, and ensuring our common purpose is fully understood and acted upon.
Fostering a truly customer-centric culture throughout the organization is at the core of Aegon’s strategy. This entails ensuring that every employee understands how he or she can contribute to a distinctive and consistently positive customer experience. To support this essential cultural mind-set, a new coordinated approach to performance management has been implemented across Aegon’s businesses, with a strong emphasis on talent development and customer centricity, and compensation and incentives aligned accordingly. Aegon encourages new thinking and innovative approaches as it continues to execute its strategy.
Optimize portfolio Aegon continued to optimize its portfolio during 2014 in its core markets in the Americas, Europe and Asia by: �� Continuously investing in the rapidly-expanding ‘at-retirement’
Marketing Excellence Awards 2014 in recognition of its innovative ‘Wonder Cook’ marketing campaign; �� Aegon the Netherlands was awarded the Gold Award by
Market conditions Despite a weak first half of the year, the global economy continued to grow in 2014, with global output expanding by 3.3%1. However, growth in many countries remained low.
Aegon’s history dates back over 170 years. Aegon N.V. was formed in 1983 through the merger of AGO and Ennia, both of which were successors to insurance companies founded in the 1800s. Aegon is headquartered in the Netherlands and through its subsidiaries employs over 28,000 people worldwide.
EUR 0.11 per common share. The interim dividend was paid in cash or stock at the election of the shareholder. The interim dividend was payable as of September 19, 2014. At the General
Run-off businesses 21 14 50% Income before tax (excluding income tax from certain proportionately consolidated joint ventures and associates) 1,021 2,072 (51%)
EUR 1,672 million in 2012. Higher underlying earnings, realized gains on investments, lower impairments and other charges were more than offset by losses from fair value items.
EUR 405 million in 2013. Both the assumptions for the bond fund and that for the long-term equity market are gross assumptions from which asset management and policy fees are deducted to determine the policyholder return.
Dividends from and capital contributions to business units Aegon received EUR 1.5 billion of dividends from its business units during 2013, split between EUR 0.9 billion from the
de C.V., a Mexican life insurance company. As of December 31, 2014, Aegon Mexico had approximately 25 employees. Aegon has entered into a joint venture with Adminstradora Akaan S.A.
Retirement’. The transition was finalized in the second half of 2014 and consolidated financial reporting for the new division began January 1, 2015. For this reason, Aegon’s 2014 Annual
Aegon USA Life & Protection Life & Protection (L&P) offers a comprehensive portfolio of protection solutions to customers in a broad range of market segments. Consumers may choose to purchase directly or through independent agents, career agents, the worksite, or affinity groups.
Variable annuities are sold to individuals and retirement plans in the United States. Variable annuities allow policyholders to accumulate assets for retirement on a tax-deferred basis, and to participate in equity or bond market performance. Variable annuities allow policyholders to select payout options designed to help meet their need for income upon maturity, including lump sum payment, or income for a fixed period or life. Variable annuities have a maturity date at which benefits must be used, or the contract surrenders. This date usually corresponds to the annuitant’s age, with a maximum age of 99 years.
plans, 457(b) plans, money purchase plans and profit-sharing plans; and �� Profit-sharing - a type of defined contribution plan in which the employer may make a contribution, on behalf of the plan participants, to the plan each year, either out of the company’s profits or from otherwise.
Guaranteed investment contracts and funding agreements GICs were generally issued to tax qualified plans, while FAs and
In addition, examinations by non-domestic state insurance departments are conducted, on a targeted, random or cyclical basis. Some state Attorneys General have also commenced investigations into a number of insurers’ business practices.
Street Reform and Consumer Protection Act (Dodd-Frank Act), enacted in 2010, established the Federal Insurance Office (FIO).
Protection and Affordable Care Act (PPACA), enacted in 2011, significantly changes the regulation of health insurance and delivery of health care in the United States, including in certain respects, the regulation and delivery of supplemental health insurance products. Individual states are required to establish health care exchanges for the purchase of health care insurance by individuals. The extent to which employers may discontinue their provision of supplemental health insurance products to retired employees and the extent to which supplemental health insurance products may be sold through state exchanges may significantly impact Aegon USA’s supplemental health products business. In implementing PPACA, several states are considering tax assessments on supplemental health insurance products to help finance the state exchange. The American Council of Life
Sales of variable insurance and annuity products are regulated by the SEC and the Financial Industry Regulatory Authority (FINRA).
(especially to seniors), selling practices, unclaimed property reporting, revenue sharing, and valuation issues involving mutual funds and life insurance separate accounts and their underlying funds. Aegon USA’s companies, like other businesses in the financial services industry, have received inquiries, examinations, and requests for information from regulators and others relating to certain historical and current practices with respect to these and other matters. Some of those inquiries
Regulations announced under the Dodd-Frank Act that limit investment by banks in certain financial services products or increase the cost of issuing certain life insurance products would have an adverse impact on the sale of life insurance products.
In particular, the market for stable value products sold to defined contribution plans, in addition to other insurance products, would be adversely affected if it were decided that these products should be regulated as derivatives. Finally, regulations under recently enacted legislation that would limit the ability of an insurer to access the US Social Security Administration’s
�� Underlying earnings before tax from Pensions decreased 6% to EUR 194 million compared with 2013. The positive impact of growth of the business and an employee benefit reserve release resulting from legislation changes of
General insurance production was flat in 2014 compared with 2013 at EUR 26 million. Production was negatively impacted by the continued focus on improving profitability.
The platform provides customers with insights into their financial future and uses a fee-based model to empower informed decision making by customers. A product of collaboration with customers, experts and critics, Knab is designed to meet contemporary customer needs.
and Delta Lloyd/OHRA. In addition, these markets are subject to quickly changing dynamics, including the growing use of online distribution channels and a changing pensions landscape
The AFM supervises both the conduct of, and the provision of information by, all parties that operate in financial markets in the
DNB also supervises pension funds, including premium pension institutions (PPIs), and investment companies. PPIs are required to maintain shareholders’ equity of at least EUR 0.5 million.
The majority of Aegon the Netherlands’ investments are managed by Aegon Asset Management. Risk-based restrictions are in place to monitor and control actual portfolio allocations against strategic portfolio allocations. An internal framework limits investment exposure to any single counterparty.
Assessment (ICA) of the capital required to withstand a 1 in 200 shock on a 1-year value at risk basis.
For early withdrawals, there are other measures to ensure that a fair share of total fund growth is received. A market value reduction may be applied to certain funds where, for cohorts of similar contracts, the face value of the benefits is greater than the value of the underlying assets. Policy conditions may state specific points for which a market value reduction will not apply.
These free assets are partly invested in equity puts and fixed interest swaps/swaptions to protect against adverse market movements. Aegon UK has an exposure only once these free assets are exhausted. The risk of exposure has been assessed by Aegon UK as remote, based on applying the risk-based capital approach now required for solvency reporting in the
Of which Income tax from certain proportionately consolidated joint ventures and associates included in income before tax (5) (15) 67%
Net income 2013 net income declined to EUR 127 million. Higher losses from fair value items and lower gains on investments compared to 2012 were only partly offset by lower impairment charges.
EUR 192 million before tax. In 2012, there was a substantial benefit related to the divestment of investment manager Prisma.
EUR 33 million compared to 2012 due to the divestment of the joint ventures with CAM, Civica and Unnim. The new joint venture with Santander contributed to underlying earnings, which was mostly offset by investments in developing a direct distribution channel. The earnings contribution from partner La Mondiale in France rose slightly and amounted to
% to EUR 35 million compared to 2012, driven by the inclusion of the joint venture with Santander and growth in Central &
In Poland1, Aegon is one of the leading providers of unit-linked products. In addition, Aegon Poland Life also offers traditional saving type products. In 2014, Aegon Poland Life’s Management
(incorporated in 2003); Aegon Czech Republic (incorporated in 2004); and Aegon Romania (incorporated in 2008). Similarly,
Transamerica Life Bermuda (TLB) recently commemorated 80 years of service to its customers in Asia. It now primarily serves the high-net-worth market in Asia through its branches in Hong Kong and Singapore.
Aegon Sony Life in Japan has two primary distribution channels: Sony Life Planner channel (operated by Sony Life), and the bank distribution channel.
ADAMS is one of the largest independent insurance direct marketing services companies in Asia by both geographic footprint and premiums. ADAMS specializes in direct and affinity marketing, and services business partners across the direct marketing value chain.
Hong Kong and Singapore - TLB TLB is incorporated in Bermuda and is regulated by the Bermuda
India - Aegon Religare Aegon Religare has a board-level Investment Committee and a board-level Risk Management Committee (RMC). Furthermore, there is a management-level Risk & Capital Committee (RCC).
Management in the United States in a pool of assets backing similar liabilities. There is a management-level Risk and Capital
Insurance companies are required to report to DGSFP on a quarterly basis. Spanish regulations incorporate all requirements of the relevant European Union directives. The local Solvency I
Group Reinsurance Use Committee is involved in the pre-approval of reinsurers, and the selection of reinsurers where a reinsurer has a rating below ‘A’. In addition, to reduce its exposure to defaults, Aegon Spain has several reinsurers on its panel and regularly monitors the creditworthiness of each. Further protection is taken out through funds that are withheld for investment by the ceding company where appropriate.
Overview of France On November 24, 2014, following a strategic review, Aegon announced its decision to sell its 35% share in La Mondiale Participations, subject to regulatory review. The sale was finalized on March 3, 2015.
La Mondiale Participations offered a range of life insurance, pensions, savings, investment and asset management services to corporate and individual retail customers through three subsidiaries: Arial Assurance, La Mondiale
Frankfurt, Germany. It operates two business lines: variable annuities and offshore bonds.
The Central Bank of Ireland has sole responsibility for the prudential supervision and regulation of Aegon Ireland. For this reason, Aegon Ireland’s entire business, state of solvency, establishment and maintenance of technical reserves, quality of corporate governance, risk management, and internal control systems are all subject to monitoring and supervision by the
Company. Similarly, Aegon has a comprehensive range of company-wide risk policies that detail specific operating guidelines and limits. These policies are designed to keep overall risk-specific exposures to a manageable level. Any breach of policy limits or warning levels triggers immediate remedial action or heightened monitoring. Further risk policies may be developed at a local level to cover situations specific to particular regions or business units. Aegon’s risk management governance structure has three basic layers: �� The Supervisory Board (SB) and the Supervisory Board Risk
The Management Board is supported by two committees: �� The Enterprise Risk Management Committee (ERMC), which supports Enterprise Risk Management (ERM) framework development and maintenance, including risk strategy, risk governance, risk tolerance, risk methodology and risk policies; and �� The Group Risk & Capital Committee (GRCC), which, as the primary balance sheet management committee of Aegon, supports risk oversight.
Currency exchange rate risk As an international company, Aegon is exposed to movements in currency exchange rates. Aegon does not, however, consider this exposure to be material from an asset liability management perspective. The Company holds its capital base in various currencies in amounts that correspond to the book value of individual business units.
Liquidity risk Aegon has put a strong liquidity management strategy in place.
Company’s income. Assumptions used to price products and establish technical liabilities are reviewed on a regular basis.
Liquidity consists of liquid assets held in investment portfolios, in addition to inflows generated by premium payments and customer deposits. These are used primarily to purchase investments, as well as to fund benefit payments to policyholders, policy surrenders, operating expenses, and, if the subsidiary’s capital position so allows, to pay dividends to the holding.
Insurance laws and regulations in local regulatory jurisdictions often contain minimum regulatory capital requirements, e.g.
The Board is grateful for the many contributions both members made to Aegon and to the Board.
Company’s readiness to comply with its requirements. In addition, the Board followed an extensive Solvency II education program.
Aegon is ranked as one of the most sustainable insurance companies in the world and a member of all leading international sustainability indices. Aegon has taken the lead in the move toward integrated reporting, as evidenced by winning the 2014
Board to fulfill Aegon’s budgeted funding needs. The 20152020 strategy process, which was launched at the end of 2014, will be discussed on a regular basis by both the Management
The Chairman of the Board and the Chair of the Risk
Aegon has had many of the elements essential to an effective
In 2014, the Supervisory Board undertook an extensive Board self-evaluation. The Chairman, supported by the Company
The performance of the members of the Executive Board was discussed regularly during 2014 at Executive Sessions, and at a dedicated meeting of the Nominating Committee in December.
Committee in December focused on IT security, Solvency II, tax policy and specific topics regarding the business in the
Mr. Robert W. Dineen to the Supervisory Board, as approved by the shareholders on May 21, 2014. When making these recommendations for appointments, the Nominating Committee determined that they were in line with the Supervisory Board
CEO and Aegon’s Global Head of Human Resources the extent to which sufficient internal candidates are available to fill positions at the Executive Board, Management Board and senior management level in the event of emergency, and when positions open up in the future. The CEO also discussed changes in the global senior management team with the Nominating
Irving W. Bailey II (1941, American) Vice-Chairman of the Supervisory Board Member of the Audit Committee Member of the Compensation Committee Irving W. Bailey II is retired Chairman and Chief Executive Officer of Providian Corp., a former Managing Director of Chrysalis
Chief Executive Officer of Aon Corporation, and Chairman of the Benelux Advisory Board of Leonardo & Co. B.V. (not listed), member of the Advisory Boards of CVC Europe (not listed)
Role of Risk Management and Compliance Variable compensation may have an impact on risk-taking behaviors and, as such, may undermine effective risk management. This can lead to excessive risk taking, which can have a material impact on the Company’s financial soundness.
Additional holding periods may apply to shares, restricting their sale for a further one to three years. Variable compensation already paid out may be retrieved under certain circumstances
2 Members of the Compensation Committee are as follows: Leo M. van Wijk (chair); Irving W. Bailey II; Robert J. Routs; Corien M. Wortmann-Kool.
Supervisory Board Remuneration Report 2014 Members of Aegon’s Supervisory Board received the following payments (in EUR) in 2014: in EUR 2014 2013
Executive Board Remuneration Policy 2014 Executive Board remuneration The Executive Board of Aegon is remunerated on the basis of the principles described in Aegon’s GRF. Aegon’s remuneration policy for members of the Executive Board is derived from this
Role of the Compensation Committee The Compensation Committee of Aegon’s Supervisory Board has responsibility for the review of the Company’s Remuneration
The allocated variable compensation consists of equal parts of cash and shares, of which 40% is paid out (or vest) in the year following the performance year, and 60% is deferred to later years. This deferred portion remains conditional until it vests.
Personal objectives 25% Individual basket of strategic and personal objectives related to Aegon’s strategy
In addition, the Supervisory Board applies an ex-post risk assessment to deferred payouts of variable compensation to determine whether allocated (that is, unvested) variable compensation should become unconditional (meaning it vests) or should be adjusted. This ex-post assessment is based on informed judgment by the Supervisory Board, taking into account significant and exceptional circumstances that are not (sufficiently)
Pension arrangements Members of Aegon’s Executive Board are offered pension arrangements and retirement benefits in line with local practices in their countries of residence, and with executives from other multinational companies in those countries. Similarly, benefits offered are consistent with Executive Board members’
Terms of employment Members of the Executive Board are appointed for four years, and may then be re-appointed for successive mandates also for a period of four years.
of the total variable compensation may be made available. Any payout is split 50/50 in a cash payment and an allocation of shares (vesting). After vesting (with the exception of shares sold to meet income tax obligations), a retention (holding) period is applicable for a further three years, before shares are at the disposal of the Executive Board members.
The shareholders Listing and shareholder base Aegon’s common shares are listed on Euronext Amsterdam and the New York Stock Exchange. Aegon has institutional and retail shareholders around the world. More than three-quarters of shareholders are located in Aegon’s three main markets, the
The engagement agreement between Mr. Button and Aegon does not entitle him to any special terms under these circumstances.
Special control rights As a matter of Dutch corporate law, the common shares and the common shares B offer equal full voting rights, as they have equal nominal value (EUR 0.12). The Voting Rights
Members of Aegon’s Supervisory and Executive Boards may be suspended or dismissed by the General Meeting of Shareholders with a two-thirds majority of votes cast, representing at least one half of Aegon’s issued capital, unless the suspension or dismissal has first been proposed by the Company’s Supervisory
Code II.3.3 The Code recommends that a member of the Executive Board should not take part in discussions or decision-making related to a subject or transaction in which he or she has a conflict of interest.
Aegon has in place a code of ethics, titled the Code of Conduct, which contains Aegon’s ethical principles in relation to various subjects. The Code of Conduct applies to Aegon employees worldwide, including Aegon’s Chief Executive Officer,
Share in profit / (loss) of joint ventures 56 - (13)
Net income / (loss) attributable to: Equity holders of Aegon N.V. 1,186 854 1,671
Coupons on non-cumulative subordinated notes - (24) - - - - (24) - (24)
Items that may be reclassified subsequently to profit or loss: Gains / (losses) on revaluation of available-for-sale investments - - 4,191 - - - 4,191 - 4,191
Coupons on non-cumulative subordinated notes - (23) - - - - (23) - (23)
2.1.1 Adoption of new IFRS accounting standards New standards and amendments to standards become effective at the date specified by IFRS, but may allow companies to opt for an earlier adoption date. In 2014, the following amendments to existing standards issued by the IASB became mandatory but are not currently relevant or do not significantly impact the financial position or financial statements: �� IFRS 10 Consolidated Financial Statements - Amendment Investment Entities; �� IAS 32 Financial Instruments: Presentation - Amendment Offsetting Financial Assets and Financial Liabilities; �� IAS 36 Impairment of Assets - Amendment Recoverable Amounts Disclosures for Non-Financial Assets; �� IAS 39 Financial Instruments: Recognition and Measurement - Amendment Novation of Derivatives and Continuation of Hedge
Items that may be reclassified to profit or loss: Gains / (losses) on revaluation of available-for-sale investments (3,349) (26) - (3,376) 4,176 15 - 4,191
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 (including impairment) of Aegon’s financial assets. The full impact will only be clear after full assessment of the standard.
b. Measurement All derivatives recognized on the statement of financial position are carried at fair value.
Notes to the consolidated financial statements of Aegon N.V. Note 2 2.11 Investments in associates Entities over which the Group has significant influence through power to participate in financial and operating policy decisions, but which do not meet the definition of a subsidiary, are accounted for using the equity method. Interests held by venture capital entities, mutual funds and investment funds that qualify as an associate are accounted for as an investment held at fair value through profit or loss. Interests held by the Group in venture capital entities, mutual funds and investment funds that are managed on a fair value basis, are also accounted for as investments held at fair value through profit or loss.
Deferred transaction costs are derecognized when the related contracts are settled or disposed off.
Notes to the consolidated financial statements of Aegon N.V. Note 2 2.18 Trust pass-through securities and (subordinated) borrowings A financial instrument issued by the Group is classified as a liability if the contractual obligation must be settled in cash or another financial asset or through the exchange of financial assets and liabilities at potentially unfavorable conditions for the Group.
Remeasurements of the net defined benefit liability (asset) which is recognized in other comprehensive income are revisited quarterly.
2.34 Events after the balance sheet date The financial statements are adjusted to reflect events that occurred between the balance sheet date and the date when the financial statements are authorized for issue, provided they give evidence of conditions that existed at the balance sheet date.
Credit risk concentrations – debt securities and money market investments 2013 Americas
Monoline insurers About EUR 0.5 billion of the bonds in Aegon USA’s portfolio are insured by monoline insurers (2013: EUR 0.8 billion), of which
The following table breaks down bonds in Aegon USA’s portfolio that are insured by monoline insurers.
Residential mortgage-backed securities Aegon Americas, Aegon the Netherlands and Aegon UK hold EUR 5,449 million (December 31, 2013: EUR 5,461 million) of residential mortgage-backed securities available-for-sale (RMBS), of which EUR 4,499 million (December 31, 2013: EUR 4,300 million) is held by Aegon Americas, EUR 932 million (December 31, 2013: EUR 1,143 million) by Aegon the Netherlands, and EUR 21 million
Securities are impaired to fair value when Aegon expects that it will not receive all contractual cash flows on its tranches.
ABS instruments of which EUR 2,997 million (December 31, 2013: EUR 2,592 million) is held by Aegon USA, EUR 2,300 million
Of which impaired assets 1 Includes investments of Holding and other activities.
The earnings on these products are impacted by movements in equity markets and risk-free interest rates. Short-term developments in the financial markets may therefore cause volatility in earnings. Included in underlying earnings is a long-term expected return on these products and excluded is any over- or underperformance compared to management’s expected return.
Income before tax 1,448 1,013 2,057 1 Including a fair value adjustment of EUR 28 million (2013: EUR 1 million; 2012: EUR 9 million).
Investment contracts for account of policyholders 26,999 2,237 58,380 4,233 - - 91,849
Total investments on balance sheet 151,004 70,999 68,556 9,754 139 (10) 300,441
Share appreciation rights and share options Senior executives of Aegon companies, as well as other Aegon employees, have been offered both share appreciation rights (SARs)
To neutralize the dilutive effect of the 2013 final dividend paid in shares, Aegon executed a program to repurchase 14,488,648 common shares. Between June 20, 2014, and July 17, 2014, these common shares were repurchased at an average price of
Polish pension business growth and profitability from current in-force business. As a result, Aegon impaired intangibles, in 2013, related to this business: goodwill (EUR 53 million); future servicing rights (EUR 110 million); and DPAC write-offs (EUR 29 million).
The economic assumptions used in all the calculations are based on observable market data and projections of future trends. All the cash-generating units tested showed that the recoverable amounts were higher than their carrying values, including goodwill.
Total investments for general account 153,653 135,409 1 Refer to note 47 Fair value for a summary of all financial assets and financial liabilities at fair value through profit or loss.
For the years ended December 31, 2014, 2013, and 2012, Aegon recognized gains and (losses) related to the ineffectiveness portion of designated fair value hedges of EUR 45 million, EUR 10 million and EUR 16 million respectively. No portion of derivatives was excluded when assessing hedge effectiveness.
Group share of net assets of associate, excluding fair value adjustments - 306
Amounts due from reinsurers in respect of claims already paid by the Group on the contracts that are reinsured are included in note 30
Net cash flows from investing activities decreased by EUR 587 million to a EUR 71 million outflow (2013: EUR 516 million inflow).
Shares vested / Share options forfeited - - (57) - (57)
Year of next call 2014 2013 2012 1 The coupon of the EUR 114 million bonds was originally set at 8% until June 8, 2005. Subsequently, the coupon has been reset at 4.156% until 2015. 2 The coupon of the EUR 136 million bonds was originally set at 7.25% until October 14, 2008. Subsequently, the coupon has been reset at 5.185% until October 14, 2018. 3 The coupon of the EUR 203 million bonds was originally set at 7.125% until March 4, 2011. Subsequently, the coupon has been reset at 4.26% until March 4, 2021.
Although the bonds have no stated maturity, Aegon has the right to call the bonds for redemption at par for the first time on the coupon date in the year of next call.
Subordinated borrowings include a liability of EUR 54 million (2013: EUR 44 million) relating to the USD 525 million non-cumulative subordinated notes issued on February 7, 2012. The liability component of the non-cumulative subordinated notes is related to the redemption amount. For further information on the non-cumulative subordinated notes and their subordination refer to note 33
Coupon rate Coupon rate Year of issue Year of maturity Year of next call 2014 2013
Trust pass-through securities are securities through which the holder participates in a trust. The assets of these trusts consist of junior subordinated deferrable interest debentures issued by Transamerica Corporation. The trust pass-through securities carry provisions with regard to deferral of distributions for extension periods up to a maximum of 10 consecutive semi-annual periods. The trust pass-through securities are subordinated to all other unsubordinated borrowings and liabilities of Transamerica Corporation.
Operational funding During 2014, residential mortgage backed securities (RMBSs) were issued under the Dutch SAECURE program for a total amount of EUR 2,810 million.
EUR 1,367 million 'SAECURE 14' RMBS Note 1),10) Floating Quarterly 2014 / 19 1,319 -
Aegon and BPHV with respect to the harbor workers’ former pension fund Optas. Refer to note 48 Commitments and Contingencies for details. In addition, the increase is due to a provision of EUR 20 million regarding the mandatory conversion of the Hungarian foreign currency mortgage debt and a provision of EUR 17 million regarding Aegon’s decision to abolish back-end loaded fees on unit-linked policies in Poland.
Breakdown of plan assets for retirement benefit plans Quoted Unquoted Quoted Unquoted
January 1, 2015 and made several other adjustments in the pension arrangement. The defined benefit obligation as at December 31, 2014 is measured including these adjustments, resulting in an increase in profit or loss of EUR 45 million before tax.
100 basis points decrease in discount rate 564 359 100 basis points increase in salary increase rate 16 16 100 basis points decrease in salary increase rate (16) (16)
Target allocation of plan assets for retirement benefit plans for the next annual period is: Equity instruments 40%
The carrying amounts disclosed reasonably approximate the fair values at year end, given the predominantly current nature of the other liabilities. In 2014 Aegon reclassified commercial paper, bank overdrafts and short-term deposits from Borrowings to Other liabilities.
The ability of Aegon’s subsidiaries, principly insurance companies, to pay dividends to the holding company is constrained by the need for these subsidiaries to remain adequately capitalized to the levels set by local insurance regulations and governed by local insurance regulatory authorities. Based on the capitalization level of the local subsidiary, local insurance regulators are able to restrict and/or prohibit the transfer of dividends to the holding company. In addition, the ability of subsidiaries to pay dividends to the holding company can be constrained by the need for these subsidiaries to have sufficient shareholders’ equity as determined by law. The capitalization level and shareholders’ equity of the subsidiaries can be impacted by various factors (e.g. general economic conditions, capital markets risks, underwriting risk factors, changes in government regulations, legal and arbitrational proceedings). To mitigate the impact of such factors on the ability of subsidiaries to pay dividends, the subsidiaries hold additional capital in excess of the levels required by local insurance regulations.
Investment contracts - held at amortized cost 14,985 - 5,542 9,951 15,492
Aegon’s portfolio of private placement securities (held at fair value under the classification of available-for-sale or fair value through profit or loss) is valued using a matrix pricing methodology. The pricing matrix is obtained from a third-party service provider and indicates current spreads for securities based on weighted average life, credit rating, and industry sector. Each month, Aegon’s asset specialists review the matrix to ensure the spreads are reasonable by comparing them to observed spreads for similar bonds traded in the market. Other inputs to the valuation include coupon rate, the current interest rate curve used for discounting and a liquidity premium to account for the illiquid nature of these securities. The liquidity premiums are determined based upon the pricing of recent transactions in the private placements market; comparing the value of the privately offered security to a similar public security.
Total financial liabilities at fair value through profit or loss 24,186 38,791 11,248 33,645
Share of contingent liabilities incurred in relation to interests in joint ventures 18 64
Aegon refers to the unclaimed property examinations that unclaimed property administrators and state insurance regulators performed of the life insurance industry in the United States, including certain of Aegon’s subsidiaries. Among these were multistate examinations that included the collective action of many states. Additionally, some states conducted separate examinations or instituted separate enforcement actions in regard to unclaimed property laws and related claims settlement practices. As other insurers in the United States have done, Aegon Americas identified certain additional internal processes that it has implemented or is in the process of implementing. Aegon Americas established reserves related to this matter of approximately EUR 117 million since 2011. Like various other major insurers in the United States, Aegon subsidiaries in the United States entered into settlements with insurance regulators regarding claims settlement practices. Certain examinations are still ongoing. While Aegon believes the reserves it has established for these unclaimed property matters are adequate to cover expected obligations, there can be no assurances that actual exposures may not exceed reserve amounts or that additional sources of liability related to those examinations or other unclaimed property-related matters will not arise in the future.
Aegon, alleging that the compensation is too low and should be paid not only to all KoersPlan policyholders, but also to holders of all other tontine saving plan products (Spaarkassen) as well as to all holders of other products sold by Aegon with a death benefit (and corresponding premium payment obligation). It is not yet possible to determine what actions, if any, Aegon may take in connection with any such expectations, or demands or claims, due to commercial necessity or future rulings or, for example, at the instigation of regulatory authorities, or the impact that any such actions may have on Aegon’s business, results of operations and financial position.
Aegon expects this to remain an industry issue for the foreseeable future. In 2013, the Klachteninstituut Financiële Dienstverlening
CAD 0.6 billion (EUR 0.4 billion). Closing of the transaction is subject to obtaining regulatory approval. As a result, the Canadian operations of Aegon have been classified as a disposal group held for sale at year-end 2014. The sale is expected to result in a book loss, excluding revaluation reserves, of approximately EUR 0.8 billion, that will be recognized as a result on disposal on the date that the transaction is closed.
EUR 6 million and resulted in a book loss, in 2013, of EUR 7 million.
The Netherlands �� N.V. Levensverzekering-Maatschappij ‘De Hoop’, The Hague, life reinsurance company (33.3%).
In EUR thousand 2014 2013 2012 1 Mr. Button was appointed as CFO and member of Aegon’s Executive Board on May 15, 2013. Conditional variable compensation is disclosed for the period that
In performance year 2013 and previous performance years Mr. Button has been awarded with variable compensation in his role as
Aegon. The amount of VAT liable over 2014 is EUR 444. The special tax levy, as introduced by the Dutch government, is no longer applicable as from 2014. The special tax levy caused an increase of Aegon’s total remuneration expenses for Alexander R. Wynaendts of EUR 417 in 2013 (2012: EUR 311) and for Darryl D. Button EUR 54 in 2013 (disclosed for the period that Mr. Button has been part of the Executive Board) and for Jan J. Nooitgedagt EUR 190 in 2013 (2012: EUR 173).
Dona D. Young (as of May 15, 2013) 118,000 77,125 -
Notes to the financial statements 1 General information Aegon N.V., incorporated and domiciled in the Netherlands, is a public limited liability company organized under Dutch law and recorded in the Commercial Register of The Hague under its registered address at Aegonplein 50, 2591 TV, The Hague, the Netherlands.
Subordinated borrowings include a liability of EUR 54 million (2013: EUR 44 million) relating to the USD 525 million non-cumulative subordinated notes issued on February 7, 2012. The liability component of the non-cumulative subordinated notes is related to the redemption amount. For further information on the non-cumulative subordinated notes and their subordination refer to note 10 Other equity instruments.
These, together with qualitative considerations, such as risk analyses at the Group and component levels, consideration of a first year audit and assessment of the control environment helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and on the financial statements as a whole.
Considering our ultimate responsibility for the opinion we are responsible for the direction, supervision and performance of the Group audit. In this context, we tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole, taking into account the geographic structure of the Group, the significance and/or risk profile of components or activities, the accounting processes and controls, and the industry in which the Group operates. We also ensured that the audit teams both at Group and at component levels included the appropriate skills and competencies which are needed for the audit of a complex global financial conglomerate, such as Aegon N.V. This included industry expertise in life and non-life insurance, banking and asset management, as well as specialists including actuaries, IT auditors, treasury, tax, corporate responsibility and valuation specialists.
Major shareholders General As of December 31, 2014, Aegon’s total authorized share capital consisted of 6,000,000,000 common shares with a par value of
Vereniging Aegon’s beneficial ownership interest in Aegon N.V.’s common shares decreased from approximately 37% to approximately 12% and its beneficial ownership interest in Aegon N.V.’s voting shares decreased from approximately 52% to approximately 33%.
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
Board of Aegon N.V., who are also members of the Executive Committee, have no voting rights on several decisions that relate to
Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 (ITRA), which was signed into law on August 10, 2012, added a new subsection (r) to Section 13 of the Securities Exchange Act of 1934, as amended, which requires Aegon N.V. to disclose whether it or any of its affiliates has engaged in certain Iran-related activities, including any transaction or dealing with the Government of Iran that was not specifically authorized by the US government, during the period covered by the filing. Non-US based subsidiaries of
The profitability of Aegon’s spread-based businesses depends in large part upon the ability to manage interest rate risk, credit spread risk and other risks inherent in the investment portfolio. Aegon may not be able to successfully manage interest rate risk, 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 2014, 2013 and 2012 was EUR 5.6 billion, EUR 5.6 billion and EUR 5.7 billion respectively.
EUR 151 billion, EUR 132 billion and EUR 142 billion, respectively.
The European Commission’s Solvency II Directive, effective date January 1, 2016, is expected to impose, among other things, substantially greater quantitative and qualitative capital requirements on some of Aegon’s businesses and at the Group level, as well as supervisory and disclosure requirements, and may impact the structure, business strategies, and profitability of Aegon’s insurance subsidiaries and of the Group. Some of Aegon’s competitors, who are headquartered outside the European economic area may not be subject to Solvency II requirements and may thereby be better able to compete against Aegon, particularly in Aegon’s businesses in the
Since 2012, further to a decision by the European Court of Justice, Aegon’s European units may no longer use gender-related factors to determine premiums and benefits under insurance policies. Aegon has not observed any negative financial or business impact through but there remains a risk of future adverse impact.
(KIFID), rendered an interim decision against another insurance company in The Netherlands. KIFID is an independent body that offers an alternative forum for customers to file complaints or claims over financial services. Its decisions may be appealed to the courts. In its interim decision, KIFID found that the consumer had not been adequately informed of the so-called initial costs embedded within its unit linked policy, nor of the leverage component thereof, and challenged the contractual basis for the charges. There are claims pending with KIFID filed by customers over Aegon products and that arguably include similar allegations. If KIFID were to finally decide unfavorably and that decision were to be upheld by a court, there can be no assurances that ultimately the aggregate exposure to
exposure to these events through individual risk selection, monitoring risk accumulation, and purchasing reinsurance. However, such events may lead to considerable financial losses to Aegon’s businesses. Furthermore, natural disasters, terrorism and fires may disrupt
While systems and processes are designed to support complex transactions and avoid systems failure, fraud, information security failures, processing errors and breaches of regulation, any failure may lead to a materially adverse effect on Aegon’s results of operations and corporate reputation. In addition, Aegon must commit significant resources to maintain and enhance its existing systems in order to keep pace with industry standards and customer preferences. If Aegon fails to keep up-to-date information systems, Aegon may not be able to rely on information for product pricing, risk management and underwriting decisions. In addition, even though back-up and recovery systems and contingency plans are in place, Aegon cannot assure investors that interruptions,
In connection with its refinancing in September 2002, Vereniging Aegon entered into an equity repurchase facility and a back-up credit facility. On February 9, 2010, both facilities were replaced by a three year term and revolving facilities agreement with a consortium of banks. In 2013, Vereniging Aegon entered into a new three year term and revolving facilities agreement with the same consortium of banks, replacing the three year term and revolving facilities agreement entered into in 2010. Under this agreement,
Aegon believes that its properties are adequate to meet its current needs.
Employees and labor relations At the end of 2014, Aegon had 28,602 employees and 5,713 agent-employees. Approximately 45% are employed in the Americas, 16% in the Netherlands, 8% in the United Kingdom and 30% in New Markets. Note that employees of the Holding are included in the Netherlands.
or deemed substantial interest (fictief aanmerkelijk belang) in Aegon and holders of Aegon common shares of whom a certain related person holds a substantial interest in Aegon. Generally speaking, a substantial interest in Aegon arises if a person, alone or, where such person is an individual, together with his or her partner (statutory defined term), directly or indirectly, holds or is deemed to hold (i) an interest of 5% or more of the total of capital issued by Aegon or of 5% or more of the issued capital of a certain class of Aegon shares, (ii) rights to acquire, directly or indirectly, such interest or (iii) certain profit sharing rights in Aegon; iv. Persons to whom the beneficial interest in Aegon common shares is attributed based on the separated private assets (afgezonderd particulier vermogen) provisions of the Netherlands income tax act 2001 (Wet inkomstenbelasting 2001); v. Entities which are a resident of Aruba, Curacao or Sint Maarten that have an enterprise which is carried on through a permanent establishment or a permanent representative on Bonaire, Sint Eustatius or Saba, to which permanent establishment or permanent representative the Aegon common shares are attributable; vi. Holders of Aegon common shares which are not considered the beneficial owner (uiteindelijk gerechtigde) of these shares or of the benefits derived from or realised in respect of the Aegon common shares; and vii. Individuals to whom Aegon common shares or the income therefrom are attributable to employment activities which are taxed as employment income in the Netherlands.
January 1. The fair market value of Aegon common shares will be included as an asset in the individual’s yield basis. The 4% deemed return on income from savings and investments is taxed at a rate of 30%.
A holder of Netherlands nationality is deemed to be a resident of the Netherlands for the purposes of the Netherlands Gift and
Finance lease is a lease that transfers substantially all the risks and rewards incident to ownership of an asset.