In a complex world it’s good to sometimes focus on what really makes our business tick — and that’s working every day to create better futures for our customers and their families.
Traditional, universal and variable universal life insurance, fixed and variable annuities, life reinsurance, supplemental health insurance, traditional and synthetic GICs, funding agreements, pensions and 401K plans, bank- and corporate-owned life insurance, mutual funds
• Broad product offerings; balanced mix of businesses • Efficient, targeted product development, coupled with advanced actuarial and administrative systems • Strong financial position, highly rated companies • Decentralized decision-making, supported by streamlined, low cost operations
Key priorities for 2002 • Realize operational synergies through increased co-operation, more effective use of IT combined with cost control • Identify new markets and opportunities • Build on established market leadership positions • Improve alignment of back-office operations
Independent intermediaries, tied agents, direct marketing, franchise sales force, worksite marketing, internet, joint ventures
Key competitive strengths • A market leader in the sale of individual life insurance and segregated funds; broad product portfolio • Strong management philosophy • Largest network of independent advisors across Canada • Team approach and commitment to service • Efficient development and targeted marketing of financial services products
Key priorities for 2002 • Strengthen distribution partnerships • Further develop strategic alliance partner markets • Continued development of innovative life insurance and segregated fund products and the development of an institutional client base
Key priorities for 2002 • Take full advantage of growth opportunities • Full integration of IT-systems to improve efficiency and accessibility of services and to reduce expenses • Continue to take advantage of ’flight to quality’ in UK market • Develop institutional investment business, particularly fixed interest mandates
Key priorities for 2002 • Emphasis on profitability, while retaining sales leadership • Introduction of new sales channels • Update and renew IT and internet access • Investigate growth opportunities elsewhere in the region
Key priorities for 2002 • Expansion life activities • Improve process efficiency through training and better customer risk profiling for agents
Corporate Actuarial Group Business Group Communications Group Finance & Group Legal Ad A.M. Kok Development Gerard van Dongen Information Erik Lagendijk
The eight Group Staff departments have specific areas of attention, defined by the Executive Board. They work for the whole Executive Board and, if so requested, for individual members. Each Head of a Group Staff department formally reports to an individual member of the Executive Board. AEGON’s Group Staff consists of some 100 people of different nationalities and is based in The Hague, the Netherlands.
Paul van de Geijn started his career at one of AEGON’s predecessors in 1971 at the legal department. In 1984 he became Vice-President and in 1986 CEO of AEGON The Netherlands. In 1992 he joined the Executive Board of AEGON N.V.
Individual and group pension and life products, savings and investment products, asset management, accident and health insurance, general insurance
Throughout AEGON’s multi-national, multi-cultural, multibranded businesses one element stands as an absolute constant: our desire to create better futures for our customers.
We must always deliver products and services that meet the needs of our customers more closely than any of our competitors, whether that means helping them save for later, bringing added security to their lifestyle or accumulating assets.
Review section a AEGON at a glance b Key markets 2 Supervisory Board 4 Report of the Executive Board
Business review 8 Creating better futures 21 Product line overview 24 The Americas 28 The Netherlands 31 United Kingdom 33 Hungary 34 Spain 35 Asia 36 Financial review
The AEGON Supervisory Board consists of nine independent business and social leaders of three nationalities.
He was appointed in 1993; his current term will end in 2004. He is a Member of the Audit, Compensation and Nominating Committees.
He joined the Board in 1997; his current term will end in 2005. He is Chairman of the Audit Committee.
He joined the Board in 1993; his current term will end in 2004. He is a Member of the Nominating Committee.
She joined the Board in 2000; her current term will end in 2004.
A Senior Partner of Baker & McKenzie; a Member of the Dutch Senate.
He was appointed in 1990; his current term will end in 2004. He is a Member of the Compensation Committee.
The main duties of the Supervisory Board are supervising the Executive Board’s management and advising the
Supervisory Board, through their three specialized committees, decides on Executive Board nominations, resignations and compensation. The Board also approves the quarterly and annual accounts and supervises internal control procedures and accounting principles. In the year under
It is with satisfaction that we report on yet another positive year for AEGON, with growth delivered successfully despite global economic deterioration and financial market volatility. In a year of continuous challenges, we applaud the achievements of Group management and staff worldwide.
During 2001 the Supervisory Board occupied itself with the fundamental responsibilities with which it is charged under
USA and the insurance portfolio of AXA Life Taiwan. We also approved the disposal of the joint ventures in Mexico, after
Executive Board. He began his life-long career in insurance at one of the AEGON USA predecessor companies, has built
AEGON USA into AEGON’s largest contributor and has been a member of the Executive Board since 1992. We are convinced that AEGON will be in good hands under his chairmanship, while the appointment of the first non-Dutch CEO confirms the status of an international company. We are confident this smooth handover of leadership guarantees a continuity in management style and strategy, ensuring that AEGON’s highly successful core values remain unchanged.
To fill the vacancy that will result from the stepping down of
van der Werf as a member of the Executive Board as of 18 April 2002.
The year also saw changes to the Supervisory Board with the retirement of Jaap Peters, the former AEGON Executive
Sir Michael Jenkins. We thank these gentlemen for their long and excellent service. As stated, the Board intends to appoint
In the current year, AEGON will face further challenges posed by a unpredictable business climate. We are confident that the Group remains strong and well-positioned to extend its unbroken record of growth and achievement.
Audit and Compensation Committees. In 2002 a fourth commitee, the Strategic Committee, will be established.
Insurance, with a strong emphasis on life insurance, pensions and related savings and investment products. AEGON focuses on the financial protection and asset accumulation needs of its clients.
AEGON’s strategy and structures, which have been successful in good times, proved their worth under decidedly less favorable circumstances last year in an adverse environment characterized by weak economic growth and a negative investment climate worldwide.
This continuing growth and outperformance is attributable to AEGON’s disciplined focus on life and pension products, its financial strength and its decentralized organization’s ability to adapt and innovate. Now one of the world’s largest life insurance companies measured by premium income, and one of the top five insurers by market capitalization, AEGON
is reaping the rewards of its clear strategy, successful entrepreneurial approach and cohesive, empowering culture. With 85% of premium income now derived from life and pension products, AEGON has built its success in countries and markets it knows well, where our local companies enjoy or are on their way to achieving top five positions based on their ability to attract and satisfy customers. In our chosen markets, companies in the AEGON
2001 also underlined the strengths of a highly distinctive group culture. Sharing expertise and information on core products and markets, AEGON professionals showed the benefits of cohesion within their decentralized environment.
For a people-based business such as ours, intangibles such as the AEGON culture and values — above all our commitment to respectful entrepreneurship — are tangible elements of our Group. AEGON’s commitment to the ‘three
Ps’ — people, planet and profit — was confirmed by our inclusion in the Dow Jones Sustainability Index of listed companies. The Index is used as a benchmark for financial products based on the concept of corporate sustainability.
The initiative for a multi-disciplinary research program on sustainable corporate performance (see page 19) to analyze and quantify the implications of sustainability, underscores the importance that we place on being an exemplary corporation.
After a period of strong growth and several major acquisitions, AEGON Americas’ companies are well placed to consolidate and exploit leadership positions while streamlining operations and realizing cost synergies.
Banamex by Citigroup in 2001, AEGON sold its joint venture interests back to Banamex, yielding a substantial capital gain. The economics and overall experience in
continues to broaden its business base, leveraging its leadership position in pensions. While there is still uncertainty about the effects of potential regulatory change, AEGON UK will be ready to respond to new challenges in the British financial services industry. With
This will be my final report as Chairman of the Executive
Board, Johan G. van der Werf, currently a member of the
Management Team of AEGON The Netherlands. He is a person with great expertise and experience in the insurance industry and he will be an excellent addition to the team.
Chairman in 1993; a series of successful and sometimes record-breaking acquisitions, along with the divestitures of businesses that no longer fitted with our strategy.
Due to continual regulatory changes impacting many facets of our business, the cost of compliance remains an ongoing issue. Policyholder information requirements, litigation liability and the gradual emergence of new accounting standards for the European market all make increasing demands on time and company budgets.
require changes in our revaluation reserve and corporate governance. In addition, the introduction of the euro, though faultlessly implemented and no doubt a positive development over the long term, has proved costly in the short term.
Canada will develop broker/dealer networks and expand distribution capabilities. AEGON The Netherlands will concentrate on continued product development and innovation. AEGON UK’s main challenge is full integration of its new IT system and reducing expenses. AEGON Hungary will focus on extending its sales channels and retaining sales leadership. AEGON Spain’s efforts will focus on building scale, especially in life insurance. In Asia, AEGON
Due to economic uncertainty and volatile financial markets, a wide range of earnings forecasts for 2002 is possible.
Working with people is great. Within AEGON I had the opportunity to enjoy that on a daily basis. Not in an ivory tower and distanced from the shop floor, but from upclose. It all contributed to building a fantastic Group and creating better futures for all stakeholders involved.
Though propelled by global trends and universal needs, insurance and pensions remain essentially local businesses, shaped by local regulations, taxes, customs and market forces. This requires local management and local expertise. AEGON’s decentralized organization is designed to provide this, while fostering a free exchange of ideas and information throughout the Group.
This approach affords efficiency, quality and cost effectiveness in a customer-responsive, decentralized organization.
Throughout the Group customer service and effectiveness of sales staff were reviewed and initiatives were made to improve effectiveness, based on the principle that customers must be able to fulfill their demands quickly and easily and at the appropriate cost levels.
In addition to this, new web-based information serviced the Group’s customers. Both more efficient administration and a skilful application of outsourcing have cut error rates and response times.
demographics coincided with a prolonged rise in global equity markets, prompting record numbers of consumers to favor variable products, where the investment risk remains with the client, as opposed to traditional fixed insurance products.
However, AEGON always recognized that no single product type could satisfy demand or be suitable for all economic conditions. So while adding new variable products to their range, AEGON companies also offered traditional term, whole and universal life products to those clients more interested in protection than investment.
Backed by a diversity of distribution channels, AEGON’s broad product mix ensured that virtually all operating units were competitively positioned to exploit this shift in sales towards lower risk products.
AEGON’s balanced product mix remains a key advantage in changing market conditions.
The shift back in the direction of traditional policies reflected the needs of consumers seeking to lower risk while meeting their capital preservation needs. The AEGON USA companies saw a near 50% upturn in fixed annuity deposits and synthetic GIC production nearly doubled. The story was repeated in the Netherlands, where gross savings deposits rose 21%. Even the UK, where equity investments have traditionally dominated, there was a shift toward products with a lower risk element — a trend that AEGON Asset Management UK was able to anticipate.
The portfolio for general account felt the effects of the highly volatile economic environment of 2001, characterized by unexpected corporate failures and rapid depreciation of credit ratings resulting in EUR 608 million
Nineteen unbroken years of profit growth underline AEGON’s commitment to long-term value creation. AEGON delivers value through the implementation of a clear and consistent strategy that is focused on meeting the financial protection and asset accumulation needs of its clients.
Commitment to this core business, together with a decentralized approach giving a high degree of autonomy to country and business units, is matched by unyielding emphasis on profitability and capital strength. AEGON supplements autonomous growth with selective acquisitions that meet strict performance criteria and methodically divests underperforming or non-core assets.
Investor and Group communications was strengthened and broadened through expanded web-based distribution of information, including the publication of all Group press releases, the possibility to view press and analyst meetings real time and the opportunity to download various presentations. Recently independent research into 200 large European companies showed that 50% of private investors use the company’s web site to satisfy their information needs.
AEGON UK has been a key respondent in the ongoing dialogue with government over proposals to restructure the UK
In addition, AEGON UK will position its operations to succeed ahead of regulatory and other industry changes and will deliver technology-based solutions to improve efficiency and accessibility.
AEGON is a dynamic and driving group of companies that actively rewards value creation and product innovation. Business units develop new products and service initiatives, maintaining close contact with customers, partners, intermediaries and distributors, to respond to their needs.
Many insurers, including AEGON, do not disclose their Embedded Value results. AEGON believes a better set of ground rules is needed if this is to become a generalized tool for measuring insurance industry profitability. So, AEGON is working to achieve industry-wide guidelines to permit meaningful benchmarking, similarly, to ensure that International Accounting Standards, under discussion, will arrive at a consistent and transparent reporting standard for financial institutions. Such a standard should enhance comparability amongst insurance companies and should result in a level playing field with other financial institutions like banks.
The steady growth of AEGON’s core business, together with new activities resulting from acquisitions, has created an organization over the years that is broadly diversified in terms of products, brands, and distribution channels.
Companies joining the AEGON Group typically retain their own distinctive brand appeal with customers, while benefiting from the parent’s reach and scale. So in the
United States, for instance, AEGON USA companies offer products using a host of niche brands, including
Money Concepts is an excellent fit. It provides AEGON Canada with a mutual fund dealer that can be leveraged to meet the needs of Money Concepts franchise owners and their representatives, while at the same time extending the availability of these dealership services to Transamerica Life Canada’s 18,000 independent distributors across Canada.
recognition among consumers for insurance protection, savings and mutual funds, while the
But marketing support has been key in keeping the agent networks strong and competitive.
200,000+ Supermarkets have for many years experimented with savings stamps, in-store banks and various financial services. But now AEGON The Netherlands has teamed up with Albert Heijn, Holland’s leading supermarket chain and the flagship of global food retailer Royal Ahold, to take this practice to a new level.
0sec Real-time information for group plan members Group pension plans are changing rapidly. Participants are increasingly directing the investments and demanding real-time information and financial modelling, now vital components of any offering.
Across AEGON, the pension units have adopted internet information delivery and web-based solutions for plan members and sales personnel. In the UK, Scottish Equitable’s ‘SmartScheme’ serves intermediaries, plan sponsors and individual participants.
Group plan members in the Netherlands used Pensioen Kompas, a similar on-line information resource which is supported by AEGON The Netherlands’ Financieel Compleet advisors, allowing franchisees who call on individual members of group plans insured by AEGON to offer personalized financial planning advice and supplementary services. In the US, participants have access to Retiretek®, an interactive, on-line investment modeling and retirement planning tool that can help participants develop a customized asset allocation strategy.
Within the AEGON structure, each company determines how to harness or leverage the power of technology to help create a better future for its customers. Thus, the multitude of new technologies and the opportunities these create are exploited in different ways across the organization. Yet, all the AEGON companies recognize the unifying power of technology to bring down costs, to support more effective distribution and to improve quality and customer service.
Technology plays a key role in harmonizing production platforms and aligning administrative systems to complete the integration process, as instanced in the USA by the
Cedar Rapids processing facility and in the UK by the involvement of Guardian in AEGON UK’s common operating environment project. New technology may also be installed on a stand-alone basis to cut costs or increase effectiveness.
In 2001 AEGON made significant progress leveraging technology to improve distribution and customer service and bring down cost. Centralized technology services give
By phone, mail or broadcast, ADMS has the ability to reach every home in America and is developing a capability, which is not easy to match. Besides generating USD 2.3 billion in sales, it is also building a powerful database with 15.5 million customers.
It is therefore natural for AEGON to support social, cultural and environmental initiatives that encourage the principle of sustainability in its broadest sense. Because of the long-term nature of our activities, creating better futures for our clients, partners and stakeholders makes sound business sense.
This chair is established in collaboration with two other major listed companies: Ahold and ABN AMRO. Its inspiration can be summed up by the ‘three Ps’: people — planet — profit. This independent and multi-disciplinary program will concentrate on developing standards for international corporate sustainability and on creating methods to measure and assess the added economic and environmental value. This includes the performance of companies in the context of socially responsible investment.
Corporate performance will be reviewed in the broader context of employment opportunities and investments in infrastructure, while corporate responsibility will also be measured against eco-efficiency benchmarks.
Sponsoring needy projects involves individual effort too: when it comes to running and other sporting fundraisers, AEGON
also has a distinguished ‘track record.’ During 2001 substantial charitable contributions were raised for The Sick Children’s Friends Foundation, Children’s Hospice Appeal Scotland and St Columba’s Hospice by AEGON UK.
2001 and launched in early 2002, this informal network of AEGON officers from various countries meets to exchange expertise and know-how, acting as a platform to exchange ideas and the best practices in this field. They will channel awareness within the Group, contribute to AEGON’s corporate code of conduct and will monitor the progress of implementations.
The environment in which AEGON operates can, of course, be much more broadly defined: we seek to nurture our reputation as well as the planet we inhabit. So responsibility and integrity are highly prized values.
Western Reserve Life, part of AEGON USA, for instance, won top honors along with two other insurance companies in the second annual American
Statements, which symbolizes the achievement of the highest tier of service provided to the financial advisors within the financial services industry.
Baltimore, USA and the University Hospital of Vrije Universiteit, Amsterdam, the Netherlands.
In 2001 AEGON continued this support, through which two researchers were appointed, who helped develop new research methods into cancer cells. The program contributed to the understanding of cancer through publication of articles in prestigious international medical journals.
IAS. AEGON supports consistent and transparent reporting standards for financial institutions which practically can be applied.
Such a standard should enhance comparability amongst insurance companies and result in a level playing field.
The discussion on respectful entrepreneurship was carried forward throughout the AEGON Group and employees contributed to projects both inside and outside the companies. AEGON UK, for instance, was recognized as being one of Great Britain’s Top 100
Employers. The company also won a prestigious award for the Staff
Pensions. Staff are allocated a number of credits which reflect the price of benefits the company pays for and staff can ‘spend’ these credits on the benefits that best suit their requirements.
AEGON UK was one of only 40 organizations worldwide to have been presented — for the second year in a row — with the British
The aftermath of tragic events in the United States on 11 September drew members of the AEGON community together to express their solidarity and social commitment.
AEGON staff gave generously to support the families of victims and firemen. A special education fund was created within AEGON USA to aid children of terrorist victims.
The fund is to assist families of firefighters, police and military personnel who lost their lives serving others. Employee donations to the fund were matched on a two for one basis and donations from employees have been generous.
creating better futures through social responsibility 11 Creating betterfutures throughcaring support
GICs are contracts issued to tax-qualified investors, guaranteeing a rate of return on assets for a fixed period and payment of principal and accumulated interest at the end of the period (usually between three and five years).
Includes variable universal life (North-America), tontine plans (the Netherlands) and unit-linked life insurance
Premiums paid on variable annuity contracts are invested in funds offered by the insurance company, including bond and stock funds. Selection of funds is dependent upon client’s chosen level of risk. Account value reflects the performance of the funds. This category includes segregated funds (Canada).
The crediting rate is reset regularly and based on an analysis of the assets; AEGON guarantees that it will not fall below 0% for a specific period of time.
security lease products). Both products generate investment spread income for AEGON.
Security lease products provide a convenient combination of monthly interest payments on a loan and a final payout based on the performance of the investments.
Limited forms of health insurance, including disability insurance and accidental health, are offered. AEGON offers no major medical coverage.
Limited forms of general insurance offered in selected markets, i.e. automobile insurance, liability insurance, household insurance and fire protection.
AEGON Americas maintained its balance and forward momentum in an unsettled market climate. Its group-wide focus on profitable growth, coupled with the acquisition of the JC Penney direct marketing operations, and the gain on the sale of the Mexico joint ventures, led to doubledigit net income growth.
Consistent performance and income growth was achieved despite a weak economy, declining equity markets and consumer uncertainty over the repeal of an important estate tax change. The AEGON Group was deeply saddened by the tragic events of 11 September, but we are thankful not to have lost any of our employees. AEGON USA acted swiftly and responsibly, taking care to verify the safety of its employees and working to ensure continuity of service throughout the market interruption. Financially, AEGON
showed its true resilience thanks to its balanced product offerings and diverse channels of distribution. In 2001 demographic trends continued to drive strong growth in the insurance, savings and pension markets, spurred by
The management team of AEGON USA from top: Donald J. Shepard Chairman, President and CEO
After successfully integrating several major acquisitions in recent years, AEGON USA’s decentralized operating structure has allowed it to effectively manage the complexity that can often accompany size. Key to its success has been creating an infrastructure that gives distinct business groups the autonomy to fully capitalize on market opportunities and customer needs. To this end,
AEGON USA will take additional steps to improve its flexibility for growth by streamlining operations and leveraging scale. Overall, AEGON’s multi-branded, multichannel distribution strategy proved well-suited to the volatile environment. Activities were reorganized into five groups last year: Agency; Alternative Markets; Financial
Group’s performance. Sales were positive, and two new variable universal life products were added to its slate of product offerings in 2001.
On balance sheet Fixed annuities Fixed GICs & funding agreements Variable annuities
United States, Canada and Mexico personal financial goals. With financial markets stabilizing and additional attention directed to marketing priorities in 2002, variable product sales should rebound modestly provided there are no major market disruptions.
Worksite Marketing. This unit offers employees a wide variety of voluntary programs to supplement existing benefits offered through employers.
AEGON Institutional Markets enjoyed another year of solid growth, with product balances increasing by 24% over 2000.
Transamerica Reinsurance maintained its strong position in life reinsurance, though this division bore the brunt of the company’s direct losses from 11 September. The year’s extraordinary circumstances demonstrated Transamerica
Reinsurance’s resilience. The company quickly adapted standard claims processing procedures to meet exceptional client needs created by the tragic events.
Transamerica Reinsurance advanced a number of initiatives to position it for growth, including web-based distribution capability for private label business needs, and an Irish reinsurance facility. Transamerica Reinsurance continued its thoughtful international expansion efforts, opening offices in Santiago, Chile and building its presence in the Asia-
Both Diversified Investment Advisors, serving medium and large pension sponsors, and Transamerica Retirement
This allows Diversified to partner with many other distribution channels that have made the decision to outsource their pension activities. New web-based information platforms for personalized advice, including Retiretek®, were welcomed by agents, intermediaries and pension plan holders alike.
In 2002 AEGON USA will continue to pursue operational synergies across its companies. All units will be working to identify new markets and opportunities to achieve budgeted sales growth in a challenging economic environment.
Priorities are to increase sales revenues through more focused support to the distribution channels, while leveraging size and scale to improve operating efficiency and service. Continued emphasis on refining ’asset liability management practices’ will strengthen risk selection.
Dealer Services Canada Inc, a broker/dealer network to bolster the expanded distribution capability of AEGON
Canada businesses. On the investment side, AEGON Canada transformed the investment division of Transamerica Life
Canada into AEGON Capital Management Inc, an investment management company positioned to compete in the
Canadian marketplace for pension funds, third-party mandates and high net-worth clients.
Throughout 2002, AEGON Canada will position itself as a wealth management and protection provider and continue to expand distribution capabilities. Customer service will continue to be enhanced through improvements in backoffice functionality. Sustained focus will be on leveraging core competencies: development of the distributor network and enhancing distribution capabilities; product innovation; investment management expertise; development of quality insurance and investment solutions; and delivery of costeffective administration.
The strongest performers were the group pension units, of which Pensioen en Advies, a traditional flagship division, has undergone extensive reorganization and revitalization.
As a result of significant improvements in competitiveness and customer service, AEGON The Netherlands is experiencing strong growth and renewals by plan sponsors. More efficient administration and a skilful use of outsourcing have cut error rates and response times, while a broad portfolio of supplementary financial and investment products and the close support that corporate pension customers receive from Financieel Compleet’s worksite marketing specialists, have all contributed to revenue growth.
On-line information and communications tools such as Pensioen Kompas also help group plan members and agents to receive on-the-spot-advice. Facing increasing regulatory and technological burdens, large plan sponsors and industry organizations that have traditionally self-insured and managed their pensions in-house, are now looking to AEGON The Netherlands to deliver bundled or unbundled packages, supported with individual attention for their employees. These packages, backed by IT resources, are increasingly helping to provide self-directed solutions for group plan members.
AXENT/AEGON and Van Nierop, continued to adjust to recent tax reforms. Emphasis has shifted from the traditional life insurance products to more sophisticated products, leading to a series of new product introductions.
The management team of AEGON The Netherlands from top: Paul van de Geijn Chairman
Among the more successful new offerings were a unit linked mortgage/life product, AEGON Beleggingshypotheek,
ToekomstPlan, RenteRetourVliegwiel and long-term investment contracts, which allow customers to acquire a stock portfolio through installment purchasing. Consumers of AEGON Personal Lines products widely demand advice from independent intermediaries. During the first two quarters of the year activity was somewhat depressed as both customers and agents adjusted to the changes in the tax laws. AEGON The Netherlands cooperated closely to educate agents and intermediaries about newly-introduced products designed to create better futures for customers, within the new taxation framework. As a consequence of the new tax legislation, insurers and intermediaries also had to amend existing policies, a major operation for
The satellite activities in Germany and Belgium, which both use direct marketing to offer simple variable insurance and savings products under the MoneyMaxx name, had contrasting results. While MoneyMaxx Germany increased its sales sharply and reinforced its position as one of the top five firms in its segment, MoneyMaxx
The growing appeal of savings products was reflected in a 24% increase of entrusted savings at Spaarbeleg Bank, which provides a convenient savings system. Another asset-
(see page 15). Products such as MoneyMaxx are ideally suited to web-based distribution and marketing. AEGON The
Netherlands resources help establish and develop MoneyMaxx activities in a number of countries.
AEGON Asset Management The Netherlands continued to increase the volume of internal and third party funds under management. It entered the retail investment market with the launch of six mutual funds. The proven track record of its fixed income department over the years has increasingly become a marketing point with institutions.
AEGON The Netherlands will continue to consolidate common activities on production platforms to achieve cost leadership and improved customer service. IT and on-line services will be standardized and utilized to extend and develop the agent network. Domestically, the product line will be expanded with emphasis on savings, specialized insurance and pension products.
Although there was a decline in asset gathering and though margins were under pressure, profitability remained good.
— an industry initiative that intends to increase consumer confidence by addressing the industry’s poor image. As
Scottish Equitable banner. Parallel to the group protection activities, AEGON Individual Protection — selling individual lines — was formed in the beginning of 2001 and achieved early success, with results more than doubling the sales forecast. The objective is to build a top five positioning in this GBP 1 billion a year market segment.
began a process of increased utilization of the low cost administrative capabilities of Lytham St Anne’s, renaming the unit AEGON UK Services. The complementary business
Manager of the Year award from a prestigious trade publication. This enhanced its established reputation as a manager of balanced investment mandates. Over 65 professional portfolio managers oversee GBP 33 billion in assets for a variety of institutions and individual investors, a five-fold increase since 1994.
In the non-life sector, AEGON Hungary retained its market leading position in household insurance, and continued to scale back the motor portfolio to improve returns. Market share in the corporate non-life sector was maintained at nearly 50%.
For the coming year AEGON Hungary will continue to emphasize profitability while retaining sales leadership.
One third of sales are expected to come through new distribution channels, while technology including internet access will be renewed and updated. AEGON Hungary continues to investigate growth opportunities elsewhere in the region.
The management team of AEGON Hungary from top: Gábor Kepecs Chairman
To offset this volume loss, AEGON Spain is emphasizing a targeted sales approach focused on generating recurring premium sales from three market segments: highly-educated urban professionals; owners and employees of small to medium enterprises and on the increasingly prosperous and relatively underserved rural sector.
Non-life activities exceeded the previous year’s results, because of revamped property and casualty insurance.
The management team of AEGON Spain from top: Jesús Quintanal Chairman
During its first full year, MoneyMaxx Spain grew with around 1,000 new contracts per month.
AEGON Spain will focus on educating consumers and growing life insurance sales. Significant energy will again be devoted to improving process efficiency through training and better customer risk profiling for agents. AEGON Spain will continue to support agents and financial advisors as they respond to customer needs for greater flexibility and performance.
Asia, enjoyed a productive year, increasing scale through organic growth and acquisition, while achieving industryleading agent productivity.
AXA’s Taiwan life operations in a synergy-driven deal that expands the client base as well as the agency force and paves the way for significant future growth. The productivity of AEGON sales agents was well above the national average, thanks to training and strong back-office support. For the merged business, named AEGON Life
Insurance (Taiwan), a new structure was created and the company moved to a new head office.
AEGON Taiwan’s priorities for 2002 are to expand the agency force and build up the broker distribution channel, which is expected to provide strong growth. New rules also permit the launch of variable products in the coming year.
The prime objective is to become one of the top three foreign insurers. AEGON Taiwan continues to review acquisition opportunities and will also provide support for developing activities in China.
AEGON received an operating license from Chinese government authorities. Subsequently, AEGON is negotiating with a local joint venture partner as a prelude to opening up operations in a leading city within this highly promising new market.
During the year AEGON laid the groundwork for the introduction of MoneyMaxx activities in Japan, which are expected to begin operations in 2002.
Following Transamerica Reinsurance’s major commitment to serve the Asia-Pacific life reinsurance markets, the company started preparations to increase its presence in the Asia-Pacific life reinsurance market and intends to establish a new liaison office in Tokyo, Japan.
Income by product segment 307 — Book profit Mexico 343 —
10.11 9.57 6 Shareholders’ equity after full conversion3 11.47 10.28 12
● Net income per share increased 12% to EUR 1.76 reflecting the 16% increase in net income and the additional 55 million shares issued to acquire JC Penney’s direct marketing insurance operations.
Americas, the Netherlands and the UK increased in local currency 15%, 7%, and 3% respectively. Total gross margin increased 13% while commissions and expenses increased
States, an amount of EUR 631 million (USD 565 million) was added to the provision. The default provision balance at year-end was EUR 338 million (USD 298 million) for the
Standardized new life production increased 2% for the year, including 17% and 16% increases in the Netherlands and UK, respectively. Increased group life market share in the
EUR 19 million for 2000. Total 11 September WTC claims were EUR 34 million (USD 30 million), net of reinsurance.
Deposits almost doubled in the fourth quarter as a result of strong production in the banking channel benefiting from the continued shift to fixed products.
Higher GIC and funding agreement results include an addition to the default provision of EUR 178 million for 2001 compared to EUR 32 million for 2000. The higher addition to the default provision was more than offset by income from higher balances and from increased investment spreads.
Lower income before tax on fee business reflects lower fees on account balances.
Higher accident and health results include EUR 104 million of acquired JC Penney’s direct marketing insurance operations’ earnings and an addition to the default provision of EUR 23 million. There was no addition to the default provision in 2000.
Higher income before tax on general insurance is due to favorable claims levels.
Corporation tax expense decreased to 28% from 29% in the prior year. The higher rates in the Netherlands and the
net income is due to inclusion of results for 12 months in 2001 and six months in 2000. Additionally, a lower allocation of interest on debt more than offset the lower net income from operations. TFCs lower operating income is due in part to a lower asset base due to asset sales, lower production of new receivables and increased credit losses.
During 2001 EUR 723 million, including EUR 72 million from the removal of the cap, was recognized as indirect return in the Group’s income before tax. This compares with EUR 595 million for the prior year. The revaluation account balance as of 31 December 2001 was EUR 4,640 million, including realized gains of EUR 3,901 million and unrealized gains of
The quality of the fixed income portfolio was stable partly as a result of write-downs following increased default activity in the US fixed income portfolios. There were no major adjustments to the credit profile or the diversity of the total portfolio.
Investments for the account of policyholders, which include unit linked products and separate accounts, decreased by EUR 1 billion to EUR 113 billion and represent 37% of total investments. On these assets the investment risk is borne by the policyholders, and the assets generate largely fee income for AEGON. The gradual shift from investments in fixed income securities to equity securities in this category continued during 2001. The largest part (62%)
of the investments for the account of policyholders remains allocated to equities. The investment portfolio for banking activities increased in 2001 from EUR 5.5 billion to EUR 7.0 billion at year-end, as a result of strong production of savings products in the Netherlands.
Off-balance sheet investments, on which AEGON also earns fees, increased strongly to EUR 54 billion, representing 18% of the total investment portfolio. This category includes assets, which are related to third party managed assets, mutual funds and synthetic GICs. Growth in this investment category was mainly driven by the strong growth of synthetic GIC-sales in the US.
AEGON distinguishes between three major risk categories: underwriting risks, investment risks and operational risks.
At the country unit level, risk management is an integral part of the business processes. Within each category
AEGON monitors the key factors that impact earnings and the financial position. In general, underwriting risks and investment risks are risks that AEGON actively assumes.
The sensitivity analysis table on this page shows the effect of movements in the exchange rates of AEGON’s most important currencies relative to the euro on forecasted net income and shareholders’ equity. The table shows that a decrease of 15% in non-euro currency rates would result in a negative impact on net income of around 11% and on shareholders’ equity of approximately 13.5%, mainly as a result of currency translation. Conversely, an increase of 15% in these exchange rates would result in a positive impact on net income of 11% and on shareholders’ equity of 13.5%. Movements of other currency exchange rates do not have a material impact on net income and shareholders’
The AEGON Group is exposed to mortality and longevity risk in its products. Annually AEGON performs sensitivity analyses, which quantify the effect of mortality and
2 The effect of interest rate movements is reflected as the effect of a one-time parallel shift up or down of all relevant yield curves on 1 January 2002. 3 The effect of currency movements is reflected as a one-time shift in value of the US dollar, the Canadian dollar and the UK pound up or down on 1 January 2002. Movements of other currencies have a negligible influence on both net income and shareholders’ equity. 4 The effect of movements in equity and real estate markets is reflected as a one-time increase or decrease of worldwide equity and real estate markets on 1 January 2002.
longevity developments on the portfolios and technical provisions. If life expectancy would increase by one year, compared to AEGON’s existing reserving basis, the positive effect on the technical provisions would be less than 0.5%.
This implies that the AEGON Group has a well-balanced portfolio in terms of mortality and longevity. Therefore, changes to mortality and longevity developments are not a current concern relative to the strong reserving basis.
AEGON uses assumptions regarding future investment yields for pricing and for the assessment of profitability of both general account and separate account products. For both type of products assumed yields are intentionally prudent. Periodically, AEGON assesses the impact of fluctuations of investment yields on pricing and profitability.
The long-term yields in all country units continue to be higher than the currently assumed yield in product pricing.
For products where AEGON offers explicit return guarantees to its clients, product pricing reflects these guarantees and the assets are managed consistently with those pricing assumptions, while the technical provisions are set prudently with a sufficient margin for adverse deviation.
AEGON defers and amortizes a part of its acquisition costs. These costs are related to the sale of insurance products. Deferred policy acquisition costs (DPAC) are carried in the balance sheet as a negative reserve, within technical provisions. This DPAC reserve is established and maintained using similar underlying assumptions as applied to technical provisions. Every year AEGON tests, by product line, the recoverability of DPAC from the future profits and future premium loadings that are forecasted to emerge from in-force contracts. AEGON’s appointed actuaries in the various countries prepare this analysis and its auditors review the DPAC valuation as part of their regular audit procedures. Because this analysis is performed on a regular annual basis, with the amortization schedule adjusted as appropriate (sometimes referred to as ‘unlocking’), significant one-time adjustments have not occurred.
Included in AEGON’s DPAC reserve is a substantial amount of Value of Business Acquired (VOBA) resulting from acquisitions, which in its nature is the same as DPAC and is subject to the same recoverability testing. At year-end 2001, this amounted to approximately EUR 7.2 billion. For more detailed information, see page 60.
AEGON country units are responsible for the management of their own investment portfolios. The asset and liability management policies employed in the units specify the level of risk and exposure that can be taken with respect to changes in interest rates, equity markets, counterparty credit and exchange rates. Those policies are also monitored at group level.
and AEGON The Netherlands account for 98% of the total general account fixed income portfolio of the AEGON Group.
AEGON USA and AEGON The Netherlands are the only country units that actively manage their duration mismatch.
The maximum allowed duration mismatch between assets and liabilities is a deviation of plus or minus one year. The combined market value weighted duration mismatch of
In line with the balance AEGON has between its books of interest sensitive and interest insensitive businesses and the relatively low duration mismatch of the AEGON Group, the sensitivity analysis shows that the potential effect of interest rate changes on forecasted 2002 net income is minimal. A simultaneous decrease of worldwide interest rates of 1% from the current levels would have a positive effect on earnings of approximately 0.5%. Conversely, an increase of worldwide interest rates of 1% would have a 0.5% negative influence on earnings.
AEGON is exposed to counterparty credit risk through exposure in corporate bonds, mortgages, over-the-counter derivatives and reinsurance contracts. Country units apply specific guidelines for the acceptable level of credit risk and consequent default provisions.
derivatives will transfer their existing derivatives positions to AEGON Derivatives NV. AEGON’s exposure and use of the various derivatives contracts is explained in more numerical detail on pages 64 and 65. AEGON engages only in medium and long-term OTC derivatives contracts if the rating of the counterparty is at least double-A.
AEGON The Netherlands account for 97% of the total general account equity portfolio of the AEGON Group. AEGON
AEGON’s shareholders equity is directly exposed to movements in the equity markets. AEGON’s accounting policy of deferring and amortizing capital gains on equity and real estate investments in the general account portfolio makes net income less sensitive to the effects of volatile equity markets than it would otherwise be. However, as the allocation of investments held for account of policyholders is 62% in equity securities, net income is sensitive to the fees earned on these assets.
The sensitivity analysis shows that net income would be approximately 4.5% lower and shareholders’ equity approximately 8% lower after a decrease of 15% in equity and real estate markets. Conversely, an increase of 15% in these markets would result in a positive impact on net income of 4.5% and on shareholders’ equity of 8%. AEGON
equity include retained earnings (EUR 1.3 billion), currency exchange rate differences (EUR 386 million) and the return on capital upon the sale of AEGON’s joint ventures in Mexico to Citigroup (EUR 602 million).
Transamerica Finance Corp. (TFC). AEGON agreed to provide the long-term funding of the Transamerica non-insurance businesses internally, and to guarantee outstanding amounts under TFC’s commercial paper program.
AEGON has further employed its access to the capital markets through private placements issued under its USD 3 billion
Euro Medium Term Notes Program. Additionally, a USD 2 billion Euro Commercial Paper Program facilitates access to international and domestic money markets when required.
AEGON maintains back-up credit facilities for outstanding debt under its Commercial Paper programs. Its committed facilities, exceeding USD 3.2 billion, have been negotiated with banks of excellent standing and credit quality. In addition,
Standard & Poor’s and Moody’s to the operating units in the
93 Other information 95 Auditor’s report 96 Report of the Supervisory Board to shareholders 98 Corporate governance 100 Data on members of the Supervisory Board of AEGON N.V. 101 Information based on US accounting principles 103 Long-term liabilities, subordinated loans and capital securities 104 Quarterly results 106 Survey of major AEGON investment funds 107 Corporate and shareholder information 108 Financial calendar
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Consolidated balance sheets at 31 December (after profit appropriation) In accordance with Dutch Accounting Principles Amounts in millions
Investments 99,827 106,343 Investments for the account of policyholders 5 113,272 114,286
Receivables 1,511 2,416 Receivables out of direct insurance 6 1,714 2,597 407 328 Receivables out of reinsurance 462 352
Technical provisions 13 683 665 Unearned premiums and unexpired risks 775 715 251 204 Profit sharing and rebates 285 219
–323 –327 Reinsurers’ share –367 –351 26 0 Deposits withheld from reinsurers 29 0
Benefits and expenses 25,655 25,736 Total benefits and expenses 28,652 27,868
Consolidated income statements In accordance with Dutch Accounting Principles Amounts in EUR millions
Change in technical provision unearned premiums and unexpired risks Gross –546 –198 Reinsurers’ share 198 –20
–80,556 –49,565 Other investments –89,966 –53,671 –174 –147 Equipment –194 –159
–64 –185 Cash settlement stock options –71 –200 –61 –22 Cash settlement subordinated convertible loan –68 –24
–487 –275 Dividend paid –544 –298 23,622 23,555 Annuity, GIC and funding agreement deposits 26,381 25,506
These financial statements have been drawn up in accordance with the rules for financial statements of insurance companies in the Netherlands, embodied in Section 15 of Title 9, Book 2 of the Dutch Civil Code. A summarized consolidated income statement has been added to the required formats for balance sheet and profit and loss account in order to present a comprehensible view of the results of the AEGON Group. AEGON’s accounting policies are in accordance with generally accepted accounting principles in the Netherlands and comply with the financial reporting requirements included in Title 9, Book 2 of the Dutch Civil Code. For some of the required information refer to the separate publication of AEGON’s Historical Data 1991-2001.
On 10 January 2001, AEGON The Netherlands and Albert Heijn (part of the Royal Ahold Group) launched their co-operation under the name AH Geldzaken, offering an innovative savings product through the Albert Heijn supermarkets.
AEGON Life Insurance (Taiwan) Inc. in Taiwan and AXA National Mutual in Taiwan reached an agreement on the acquisition by AEGON of AXA’s Taiwanese life insurance activities on 10 October 2001. The acquisition was completed at the end of 2001.
On 18 January 2002 AEGON announced the sale of its partnership interests in Seguros Banamex AEGON and Afore Banamex AEGON in Mexico to Citigroup’s Grupo Financiero Banamex for an amount of EUR 1.41 billion (USD 1.24 billion). In addition, AEGON will receive EUR 44.7 million (USD 40 million) as dividend on the 2001 profits of the joint venture companies. The transaction was effective as of 31 December 2001 as parties had concluded negotiations and reached a basic agreement in principle by then. The consideration included a net book gain of EUR 896 million (USD 0.8 billion). This gain consists of EUR 602 million (USD 0.5 billion) of return on invested capital, which was charged to shareholders’ equity as goodwill in earlier years. As a result, this EUR 602 million has been credited to shareholders’ equity. The remaining EUR 343 million (USD 0.3 billion) represents a capital gain, which has been accounted for in the profit and loss account (EUR 294 million after tax).
In the consolidated financial statements of AEGON N.V. all group companies have been included, except for some group companies for which the aggregate financial effect is relatively insignificant and for companies which are not intended to be held for a longterm ownership. Also group companies of which consolidation would not result in a fair view of the Group because of dissimilar activities have not been consolidated. The financial statements of these latter companies have been added separately in the notes. Their results have been included in the income statements on a separate line. Participations in joint ventures have been consolidated proportionally.
As an international life insurance group, AEGON is exposed to currency fluctuations, to changes in mortality and longevity and to changes in the value of its investments, credit risk and the impact of interest rate changes. For information about risks and sensitivity of the Group for movements in the interest rate markets, the currency markets and the equity and real estate markets, and their effects on net income and shareholders’ equity, refer to the financial review on page 40.
Commitments and contingencies on page 64 include comprehensive descriptions about derivatives used by AEGON. In the normal course of business, AEGON employs established policies and procedures to manage its exposures to changes in interest rates and fluctuations in the value of currencies using a variety of financial instruments. The credit risk on financial instruments is controlled by detailed internal guidelines for the acceptable level of credit risk, including exposure limits depending upon the respective counterparty credit rating and by regular monitoring thereof. In addition, the aggregated exposure to financial institutions is monitored at group level.
Asset default provisions exist resulting from structural risk analysis based on counterparty credit rating, experience and topical developments. Technical provisions are reviewed regularly to detect adverse deviation from the underlying assumptions. If these tests reveal a negative outcome, the provision is adjusted according to the actual data. Deferred policy acquisition costs are tested annually to assess their recoverability from future premium loadings or expected gross profits. If necessary, adjustments to the amortization schedule are applied.
Real estate for own use 375 293 Other real estate 1,951 1,823
New property is valued at construction cost including interest during the construction period, or at purchase price. Unrealized and realized gains and losses on real estate investments as well as results, expenses and currency exchange rate differences from hedging transactions are recognized in the revaluation account, taking into account the related (deferred) taxes. The participation in AMVEST Vastgoed is accounted for under this caption. Purchase price of the portfolio amounts to EUR 1,832 million (2000: EUR 1,724 million).
The Transamerica non-insurance businesses (Transamerica Finance Corporation) are accounted for under shares in group companies at net asset value. These group companies have not been consolidated because of their dissimilarity in operations. Consolidated financial statements have been included on page 73 and following.
The other fixed rate securities include preferred shares and money market investments. Preferred shares are valued at amortized cost; money market investments are valued at cost.
Realized gains and losses from transactions within the bonds and private placements portfolios are deferred and released to the income statements in annual installments over the estimated average remaining maturity term of the investments sold.
Redemption value of the bonds 74,516 64,066 Deferred purchase differences –5,713 –6,887
Amortization value bonds 68,803 57,179 Other fixed rate securities 4,857 4,061
Loans guaranteed by mortgages are valued at redemption value. Discounts granted are deferred and amortized to income over the contractual period of interest fixation.
Private placements are shown at amortized cost representing the cash value at the balance sheet date of future interest and principal repayment components based on the effective interest rate on the date of acquisition. Realized gains and losses from transactions within the private placements and bond portfolios valued at amortized cost are deferred and released to the income statements in annual installments over the estimated average remaining term to maturity of the investments sold.
Market value of the portfolio amounts to EUR 26,843 million (2000: EUR 23,916 million). As no market exists for these investments, market value is calculated based on current interest rates, term to maturity and risk assumptions. For a proper understanding it should be noted that this market value is not part of the matching of these investments with the related insurance liabilities, which are not stated at market value either.
This item relates to amounts that can be called up after a certain period of time, the period exceeding one year. Market value of the deposits is equated with book value.
Market value of policy loans is set equal to book value. The market value of receivables out of share lease agreements and others amounts to EUR 3,131 million (2000: EUR 2,281 million). The provision for doubtful debts amounts to EUR 34 million (2000: EUR 34 million).
CHANGES IN INVESTMENTS Currency exchange rate Balance at Disposed differences Balance at 1 January and Revalu- and other 31 December 2001 Acquired redeemed ations changes1 2001
Deposits with credit institutions 1,215 304 –10 — 44 1,553 1 Mainly caused by acquisitions.
Disposed and redeemed –40,866 –22,390 Currency exchange rate differences and other changes –7,876 –165
Other receivables include items for an amount of EUR 1,386 million maturing within one year. The remaining items have terms maturing beyond one year. The provision for doubtful debts for these receivables amounts to EUR 9 million (2000: EUR 15 million).
Depreciation –46 –33 –79 Disposals and other changes –5 –6 –11
Notes to the consolidated balance sheets Amounts in EUR millions 9 LIQUID ASSETS
Perpetual cumulative subordinated loans 1,517 1,267 Trust Pass-through Securities 584 553
The market value of these loans amounts to EUR 634 million (2000: EUR 658 million).
12 SUBORDINATED (CONVERTIBLE) LOANS Remaining terms Total Total 1–3 years 4–5 years over 5 years 2001 2000
Deferred policy acquisition costs –13,459 –15,264 Unamortized interest rate rebates –432 –424
Non-life insurance: Unearned premiums and unexpired risks 1,244 348 168 1,760 Deferred policy acquisition costs –545 –1,202
Profit sharing and rebates 219 285 1 Of which the balance of deposits and withdrawals is EUR 3,086 million. 2 Of which the balance of deposits and withdrawals is EUR 2,978 million.
The technical provision for life reinsurance assumed is included in this provision as well. The average interest rate used is 5.33% (2000: 5.39%). Taking into account the capitalized interest rate rebates, the average interest rate used is 5.57% (2000: 5.67%).
Unearned premiums represent the unearned part of premiums received for both property and casualty insurance as for accident and health insurance. The provision for unexpired risks includes a provision to compensate for the increasing age of persons insured under health and personal accident policies.
Balance at 1 January 545 472 Deferred during the year 302 161 Amortization charged to the income statement –219 –141 Other changes1 574 53
Net balance 1,814 1,535 Incurred related to: — current year 1,422 1,600 — prior years 120 33
Paid related to: — current year –902 –669 — prior years –599 –690
The provision for claims outstanding relates to claims incurred in the current and previous years, still unsettled at year-end. Calculation takes place either on an item-by-item basis or on the basis of statistical information, taking into account claims incurred but not yet reported. In calculating the provision, the future costs of processing claims are considered. A different method is applied to marine, aviation and transport insurance. The calculation is based on the ‘underwriting years system’ with premiums deferred and claims combined in a fund.
This consists mainly of insurance deposits under Dutch group life contracts, which are designated for improvement of retirement benefits under such contracts. Maturity is undetermined. Interest credited to such deposits is linked with the average yield on long-term Dutch government bonds.
Notes to the consolidated balance sheets Amounts in EUR millions 14 TECHNICAL PROVISIONS WITH INVESTMENTS FOR THE ACCOUNT OF POLICYHOLDERS Decrease Exchange rate Balance at credited to fluctuations Balance at 1 January the income and other 31 December 2001 statement changes 2001
Provisions for insurance of which the policyholder bears the investment risk and for insurance-linked savings deposits 114,286 –5,504 4,490 113,272
This provision includes unit-linked insurance contracts, separate investment funds Group Life, insurance-linked savings deposits and the liabilities of AEGON UK with profit funds (EUR 26,838 million). The amount of EUR 5,504 million credited to the income statement is the total of premium receipt and benefits of EUR 4,011 million and the investment income for the account of policyholders amounting to EUR –9,515 million. Also the liabilities of the acquired pension business of Diversified Investment Advisors (USA) are recognized under this heading to the extent that the contractholder bears the economic risk. The provisions are generally shown at book value of the related investments. As some products have a minimum guaranteed benefit amount at maturity, a provision for this benefit is accumulated during the term of the related portfolio. The provision has been included in the technical provisions life insurance.
The deferred taxation is calculated on the basis of the difference between book value and valuation for tax purposes of the appropriate assets and liabilities. Deferred tax assets are recognized to the extent that it is probable that future taxable profits will be available.
The provision is equal to the discounted value of the future tax amounts. In the calculation discounted tax rates ranging from 0% to nominal rates are used, taking into account the estimated term to maturity of the related differences. Nominal value of these tax amounts is EUR 3,518 million.
As at 31 December the provisions for taxation consist of: Deferred tax liabilities relating to: Deferred policy acquisition costs 3,447 3,572
Total tax losses carried forward 1,054 813 Tax losses carried forward not recognized within deferred tax assets 174 813
Tax losses carried forward recognized within deferred tax assets 880 0 Average tax rate 33.6% — Deferred tax assets relating to operating losses carried forward 296 —
Capital market: Other: Senior debt related to insurance activities assigned to the capital base 3,982 3,245
Long-term liabilities mainly relating to the financing of Transamerica Finance Corporation and to the run-off debt financing for FGH Bank 1,102 780
The repayment periods of borrowings vary from in excess of one year up to a maximum of 29 years. The coupons vary from 0.093% to 10.0% per annum. Borrowings include debenture loans for EUR 1,568 million. The market value of total long-term liabilities amounts to EUR 4,781 million (2000: EUR 4,013 million).
AEGON does not hold or issue derivative instruments for speculative trading purposes.
Interest rate contracts, which include swaps, swaptions, caps, floors and forward rate agreements are used to alter interest rate types in order to match assets and liabilities. The contracts are designated individually or in groups to specific liabilities at the inception of the contracts.
Swaptions entitle the Company to receive settlement payments from other parties on specified expiration dates, contingent on future interest rates. The amount of such settlement payments, if any, is determined by the present value of the difference between the fixed rate on a market rate swap and the strike price multiplied by the notional amount. Premiums paid for swaptions are deferred and amortized to interest expense on a straight-line basis over the term of the contract.
The Company’s exposure to credit risk is the risk of loss from a counterparty failing to perform according to the terms of the contract. The Company continually monitors its position and the credit ratings of the counterparties to these derivative instruments. To limit exposure associated with counterparty non-performance on interest rate and cross currency swap contracts, the Company enters into master netting agreements with its counterparties. The Company believes the risk of incurring losses due to non-performance by its counterparties is low due to their high credit quality. The credit exposure of interest rate and cross currency swap contracts is represented by the fair value of contracts. Interest rate swap, cap, and floor agreements are subject to replacement cost risk, which is the possibility that future changes in market prices may make the instruments less valuable.
Notional Fair Book Notional Fair Book amounts value value amounts value value
1 ANALYSIS OF PREMIUMS LIFE INSURANCE 2001 Life insurance Investments for the account of policyholders
2 ANALYSIS OF TECHNICAL RESULTS Legal Marine, NON-LIFE INSURANCE Accident liability Other transport General Other
Result technical account non-life 194 7 18 2 8 11 9 249
The combined ratio is the sum of the ratio of net incurred claims to net premiums earned and the ratio of net commissions and expenses to premiums own account. Although a ratio over 100% suggests a loss, the ratio does not include investment income. With the inclusion of investment income in the calculation, all of AEGON’s major product lines were profitable.
Notes to the consolidated income statements Amounts in EUR millions 3 INVESTMENT INCOME NonLife Non-life technical Total
Change in technical provisions 8,815 7,513 6 PROFIT SHARING AND REBATES
Commissions and profit sharing from reinsurers –305 –157 –462 Banking and other activities 96 96
Deferred policy acquisition costs –2,232 –161 — –2,393 Amortization of deferred policy acquisition costs 1,143 141 — 1,284
Commissions and profit sharing from reinsurers –335 –128 — –463 Banking and other activities — — 85 85
Deferred policy acquisition costs -2,558 -2,393 Amortization of deferred policy acquisition costs 1,422 1,284 Commissions and profit sharing from reinsurers -462 -463
AEGON has non-contributory defined benefit plans and defined contribution plans covering substantially all AEGON employees. In a number of countries retirement benefits are insured with our life insurance companies based on the appropriate actuarial formulas. In the other countries the provisions for pension obligations are vested in separate legal entities, not forming part of AEGON.
In the United States and in the United Kingdom benefits are based on past and future service, taking into account future salary and benefit levels as well as estimated inflation in future years. Regular improvements of benefits are allocated to future service years. In the United States, the present overfunding of the pension plans and the related interest benefit on pension plan assets cause pension expense to be a credit.
The average number of employees was 25,790 of which 4,298 agent-employees (2000: 24,377 of which 4,112 agent-employees). The specification per geographical area is as follows: The Netherlands 3,073 3,059 United Kingdom 4,574 4,404 Other countries 2,136 1,927
H.B. van Wijk (up to 4 May 2000) 188 188 1,093 1 Under an annual bonus scheme of EUR 24,463 per member per percent point increase in the preceding year earnings per share over the rate of inflation, with a maximum of that year’s salary.
Remuneration of active and retired members of the Supervisory Board In EUR 2001 2000
At the balance sheet date, J.B.M. Streppel had a 5% mortgage loan of EUR 680,700. In accordance with the contract no redemptions were received on this loan in 2001.
The aggregate amount of AEGON N.V. common shares held by the Supervisory Board members was 20,581 as per 31 December 2001. Members of the Supervisory Board do not hold options on AEGON N.V. shares.
Since their acquisition, AEGON has been accounting for the non insurance businesses of Transamerica (Transamerica Finance Corporation) as participations and has recorded them at cost. Following a change in accounting, resulting from the decision to retain and continue to develop these businesses as operating units of the Group, these businesses are carried at net asset value in the balance sheet as of 30 June 2000.
From 21 July 1999 up to the first six months of 2000 dividends declared were included in earnings for an amount that offset the funding cost. Effective 1 July 2000, net income of the non insurance businesses has been included in consolidated earnings. The non-insurance businesses of Transamerica include lending, leasing and real estate information services. The lending business makes commercial loans through three operations: distribution finance, business credit and equipment financial services. Leasing is comprised of the Company’s marine container and European trailer operations. Real estate information provides tax and flood hazard services primarily to mortgage originators and servicers.
Due to their dissimilarity in operations in relation to the operations of AEGON, these group companies have not been consolidated. Following are the consolidated balance sheets, consolidated income statements and notes thereto of Transamerica Finance Corporation, established in Delaware and operating from San Francisco, California, USA. Valuation and determination of results are based on Dutch accounting principles.
Interest and debt expense 470 660 Salaries and other employee expenses 365 384 Depreciation on equipment held for lease 246 307 Addition to the provision for doubtful accounts 155 149 Miscellaneous income and expenditure 590 589
Where not otherwise stated, balance sheet items are carried at face value. If necessary a provision for bad and doubtful debts has been deducted.
The contractual maturity is: Within three months 2,063 2,520 Between three months and one year 1,743 1,871 Between one and five years 3,144 3,574 Over five years 915 951
Equipment held for lease is shown at cost less depreciation over the estimated useful life. Assets held for sale consists primarily of consumer mortgage and retail finance receivables.
The business credit unit of the commercial lending operation provides revolving lines of credit, letters of credit and standby letters of credit. At 31 December borrowers’ unused credit available under such arrangements totaled EUR 2,340 million.
The company has entered into arrangements in which it securitized and services inventory floorplan, equipment finance and leasing, insurance premium finance receivables and residential mortgage as well as small business administration loans. Securitized assets at 31 December totaled EUR 3,083 million.
Revenues 1,939 2,054 –6 Life general account single premium 2,165 2,224 –3 4,954 4,574 8 Life general account recurring premium 5,533 4,953 12 5,697 6,301 –10 Life policyholders’ account single premium 6,363 6,823 –7 3,779 3,678 3 Life policyholders’ account recurring premium 4,220 3,983 6 16,369 16,607 –1 Total life insurance gross premiums 18,281 17,983 2
–8,520 –3,228 Investment income for the account of policyholders –9,515 –3,495
Off balance sheet production 7,629 8,690 –12 Mutual funds/Collective Trusts and other managed assets 8,520 9,410 –9 19,338 14,581 33 Total production off balance sheet 21,597 15,789 37 647 549 18 1 Of which indirect income on real estate and shares 723 595 22
Life general account single premium 1,047 1,318 –21 1,170 1,427 –18 Life general account recurring premium 4,179 3,869 8 4,667 4,190 11 Life policyholders account single premium 1,001 991 1 1,118 1,073 4 Life policyholders account recurring premium 712 668 7 795 723 10
Total life insurance gross premiums 6,939 6,846 1 7,750 7,413 5
Investment income for the account of policyholders –5,329 –3,676 –5,951 –3,981
Total production on balance sheet 23,622 23,555 0 26,381 25,506 3
Total production off balance sheet 18,109 13,316 36 20,225 14,419 40 1 Includes also variable annuities and fees.
Income before tax 924 840 10 Corporation tax –228 –187 22
Life general account single premium 768 553 39 Life general account recurring premium 569 602 –5 Life policyholders’ account single premium 814 739 10 Life policyholders’ account recurring premium 1,486 1,429 4
Total life insurance gross premiums 3,637 3,323 9 Accident & health insurance 146 129 13
Total production off balance sheet 868 354 1 Includes income on off balance sheet type products.
Mutual funds/Collective Trusts and other managed assets 275 580 –53 442 952 –54
Investment income for the account of policyholders 4 2 –36 –26 38 –52 –4
Mutual funds/Collective Trusts and other managed assets 62 64 –3 — — — —
Total production off balance sheet 62 64 –3 — — — —
Investments, assets, liabilities geographically Amounts in EUR millions unless otherwise stated
As at 31 December 2001 in USD in EUR in GBP in EUR in EUR total
High yield (BB+ or less) 4,862 173 0 6 5,695 5
As at 31 December 2000 in USD in EUR in GBP in EUR in EUR total
AEGON USA, Inc., Cedar Rapids (Iowa USA) AUSA Life Insurance Company, Inc., Purchase (New York USA) Commonwealth General Corporation, Wilmington (Delaware USA) First AUSA Life Insurance Company, Baltimore (Maryland USA) J.C. Penney Life Insurance Company, Rutland (Vermont USA) Life Investors Insurance Company of America, Cedar Rapids (Iowa USA) Monumental Life Insurance Company, Baltimore (Maryland USA) Peoples Benefit Life Insurance Company, Cedar Rapids (Iowa USA) Transamerica Corporation, Wilmington (Delaware USA) Transamerica Insurance Corporation, Cedar Rapids (Iowa USA) Transamerica Life Canada, Scarborough (Ontario Canada) Transamerica Life Insurance and Annuity Company, Charlotte (North Carolina USA) Transamerica Life Insurance Company, Cedar Rapids (Iowa USA) Transamerica Occidental Life Insurance Company, Cedar Rapids (Iowa USA) Veterans Life Insurance Company, Springfield (Illinois USA) Western Reserve Life Assurance Co. of Ohio, Columbus (Ohio USA)
AEGON Bank N.V., Utrecht AEGON Financiële Diensten B.V., The Hague AEGON International N.V., The Hague AEGON Levensverzekering N.V., The Hague AEGON NabestaandenZorg N.V., Groningen AEGON Nederland N.V., The Hague AEGON Schadeverzekering N.V., The Hague AEGON Spaarkas N.V., The Hague AEGON Vastgoed Holding B.V., The Hague AMVEST Vastgoed B.V., Utrecht (50%) Van Nierop Assuradeuren N.V., Amsterdam Spaarbeleg Kas N.V., Utrecht
Balance at 1 January 11,251 12,620 Capital contribution and acquisitions 0 1,396 Divestitures 0 –847 Net income for the financial year 2,337 2,053 Dividend distributed –360 –1,753 Cash settlement subordinated convertible loan 0 –24 Goodwill –277 –2,254 Revaluations –1,101 60
Balance at 1 January 3,392 2,774 Additional loans 4,117 649 Repayments or payments received –1,224 –56 Other changes 205 25
Senior executives of AEGON companies as well as other AEGON employees have been offered AEGON stock options or stock appreciation rights in 2001. In previous years similar possibilities were offered. The options have been granted at an exercise price equal to the market price of the shares at the date of the grant. The options granted in 2001 can only be exercised three years after being granted and then during a period of two years, as was the case in the 1997, the 1998, the 1999 and 2000 stock option plans. Stock options plans can only be established after the prior consent of the Annual General Meeting. If, subsequently, the Executive Board decides to implement stock option plans, that decision has to be approved by the Supervisory Board. Options granted in earlier years can generally be exercised during a period of five years. Options granted pursuant to the purchase agreement with Providian have various expiration dates. The options granted to senior executives of former Providian business units fully vest in three years and the exercise period is up to ten years, ending at the latest in August 2008.
Number of exercise options1 price1 1 Adjusted for the 2:1 stock-split in May 2000 and including stock appreciation rights.
Stock options number1 20011 20011 EUR Exercise period3 1 Adjusted for the stock splits in 1995, 1998 and 2000 as appropriate.
5 SURPLUS FUNDS Paid-in Revaluation Other Total Total surplus account surplus fund 2001 2000
Issuance of new shares 1,677 1,677 0 Repurchased and sold own shares –21 –21 –423
Balance of revaluations at 1 January 6,177 6,682 Unrealized gains and losses on real estate and shares –1,051 –33 Unrealized gains and losses in previous years on real estate and shares sold in the reporting year 517 –2,604 Realized gains and losses on real estate and shares –507 2,612 Transfer to the income statements of indirect income on real estate and shares –723 –595 Changes in the provision for deferred taxation 306 71 Other changes –79 44
By virtue of acquisition in accordance with article 98, paragraph 5 of Book 2 of the Dutch Civil Code, per balance sheet date AEGON kept 30,923,080 own common shares with a face value of EUR 0.12 each. The shares have been purchased to hedge stock option rights granted to executives and employees.
Movements in the numbers of shares were as follows: Balance at 1 January 31,407,080 Purchase: 32 transactions, average price EUR 35.31 11,288,800 Sale: 105 transactions, average price EUR 32.10 –11,772,800
Goodwill is the difference between acquisition price and net asset value, based on AEGON accounting principles. The calculated amount is charged to shareholders’ equity in the year of acquisition. The book gain is the part of the consideration from the sale of the Mexican joint ventures to Banacci (Citigroup) that relates to the return on invested capital which was charged to shareholders’ equity as goodwill in earlier years.
Remaining terms up to 3 years 1,458 495 Remaining terms 4-5 years — 333 Remaining terms over 5 years 430 318
The repayment periods of borrowings vary from in excess of one year up to a maximum of 29 years. The interest rates vary from 0.093% to 9.875% per annum.
AEGON N.V. has guaranteed and is severally liable for the following: Due and punctual payment of payables by AEGON Funding Corp. and AEGON Funding Corp. II with respect to bonds, notes issued and Commercial Paper Programs.
Due and punctual payment of payables by Transamerica Finance Corp. with respect to notes issued in connection with Transamerica Finance Corp.’s Commercial Paper Program.
FGH BANK N.V., for the sake of a. all unsubordinated and non-privileged creditors, to whom FGH BANK owes from deeds prior to 27 February 1987, and from all loans contracted by FGH BANK after 27 February 1987, up to 30 March 1998; b. those whom FGH BANK guaranteed or assumed several liability prior to 27 February 1987. The sales agreement with Hypo-Vereinsbank includes recourse against that bank for liabilities emerging from above guarantees.
Upon approval of the annual accounts at the Annual General Meeting of Shareholders on 18 April 2002, which contain the profit appropriation, a dividend for the year 2001 of EUR 0.83 per common share of EUR 0.12 par value will be paid, which after taking into account the EUR 0.37 interim dividend, leads to a final dividend of EUR 0.46 per common share.
In accordance with article 24, paragraph 3 of the Articles of Incorporation, a dividend equal to 6.5% of the paid up amount of the preferred stock will be distributed in cash.
Finally, an amount of EUR 1,252 million will be retained and added to the general surplus fund.
At balance sheet date AEGON N.V. had one shareholder holding an interest of more than 5%. This major shareholder is the Dutch association “Vereniging AEGON”, an independent shareholder of AEGON N.V.
The objective of the Vereniging is the balanced representation of the interests of AEGON N.V. and all of its stakeholders, i.e. shareholders, AEGON group companies, insured parties, employees and other relations of the said companies.
In accordance with the stipulations of the 1983 Merger Agreement the Vereniging has a majority vote at the general meeting of shareholders of AEGON N.V. This is achieved by holding a minority interest in common shares and holding all issued preferred shares in AEGON N.V. As of 31 December 2001 this voting right stood at 52% (2000: 53%) and the Vereniging held 37% (2000: 37%) of the common shares in AEGON N.V. in circulation. The holding of common shares is intended to be increased gradually to approximately 40% while the holding of preferred shares will be reduced simultaneously.
In our opinion, the financial statements give a true and fair view of the financial position of the company as at 31 December 2001 and of the result for the year then ended in accordance with accounting principles generally accepted in the Netherlands and comply with the financial reporting requirements included in Part 9, Book 2 of the Netherlands Civil Code.
The Supervisory Board carried out its responsibilities in 2001 in close cooperation with the Executive Board, holding five regular meetings and four extra meetings. One regular meeting was held in Baltimore, USA, in order for the Supervisory Board members to become better acquainted with AEGON USA’s management. All members attended the Annual General Meeting of Shareholders (AGM) held on 3 May 2001.
In accordance with the Board’s internal Rules and Regulations, both regular meetings and the AGM were preceded by preparatory meetings attended by the Chairman and the Vice-Chairman of the Supervisory Board as well as the Chairman (and, in most instances, one other member) of the Executive Board.
Regular Supervisory Board meetings were also attended by the Executive Board members. Those meetings, during which the results for 2000 and the quarterly results for 2001 were discussed, were also attended by the Directors of the Group Finance and the Corporate Actuarial departments. Representatives from Ernst & Young (E&Y), AEGON’s external auditor, attended the discussion regarding the results for 2000.
We again discussed corporate governance issues. The pending change in Dutch corporate law, which would amend the so-called structure regime, will definitely require a rethinking of AEGON N.V.’s position as a ‘structure company’. Discussions will continue in 2002.
Without prejudice to its own responsibilities, the Supervisory Board relies upon Committees to deal more extensively with specific matters. Each Committee has four members, drawn from the Supervisory Board.
Discussions in 2001 were dominated by subjects on the Committee’s permanent agenda: quarterly results, annual accounts and the auditing of the results and annual accounts by E&Y; accounting principles; internal control systems; actuarial analyses; AEGON’s ‘Funding Plan’ and ‘Currency Exposure’ and the Group Wide Risk Report. The Committee also discussed E&Y’s independence and its fees, in order to be able to advise on the reappointment of E&Y as AEGON’s external auditor. The Audit Committee subsequently advised the Supervisory Board on its findings.
The Chairman and the Vice-Chairman of the Supervisory Board and Messrs. Eustace and Peters served as members of the Audit Committee. Following Mr. Peters’ retirement on 3 May 2001, Mr. Posthumus was appointed as a member. In accordance with the Audit Committee Charter, all members are highly experienced and competent in financial and accounting matters.
The Compensation Committee, active since 1989, held three meetings in 2001, also attended by the Executive Board’s Chairman. Discussions concentrated on the structure of the remuneration of the Executive Board members and the granting of stock options to the Executive Board members. The Supervisory Board’s Chairman and Vice-Chairman and Mr. de Wit are members of this Committee, as was Sir Michael Jenkins until his resignation on 1 December 2001. He was succeeded by Mrs. Rembe.
The Nominating Committee, active since 1993, held two meetings, attended also by the Executive Board’s Chairman. The Committee discussed the composition of the Executive Board following Mr. Storm’s retirement. The Supervisory Board’s Chairman and ViceChairman and Mrs. Peijs and Mr. Olcay are members of this Committee.
In 2002, the Supervisory Board will establish a fourth body, the Strategy Committee. The purpose of this Committee is to review the major features of the strategy proposed by the Executive Board and to prepare presentations of the strategy to the Supervisory Board, to suggest options and alternative avenues, and to consider material aspects relating to implementation of the agreed strategy. This Committee will meet at least once a year, well before the full Supervisory Board discusses AEGON’s strategy. This Committee shall consist of four members: the Supervisory Board Chairman and Vice-Chairman, Mr. Olcay and Mr. de Wit.
On 8 November 2001, Mr. Storm announced that, as he would reach the retirement age of 60 in June 2002, he would retire on 1 July 2002, having stepped down as Chairman of the Executive Board on 18 April 2002, at the end of the AGM. He joined AEGON in 1978 as a member of the Executive Board of AGO, one of AEGON’s predecessors, and became Chairman of the Executive Board of AEGON in May 1993, succeeding Mr. Peters. Under his Chairmanship, AEGON has experienced tremendous growth and developed into one of the world’s largest listed life insurers. We are very grateful for his strong and charismatic leadership, which has also enabled AEGON to become an organization with a great sense of team spirit. We have appointed Mr. Shepard as his successor as Chairman of the Executive Board as per 18 April 2002. He started his AEGON career in 1970 at Life Investors, Iowa, USA, one of AEGON USA’s predecessors and became President and CEO of AEGON USA in 1989. In 1992, he was appointed as a member of the Executive Board. Mr. Shepard has now worked at AEGON for more than 30 years and we are convinced that AEGON will be in good hands under his Chairmanship. This appointment affirms AEGON’s status as an international company.
On 3 May 2001, Messrs. Eustace, Posthumus, Stevens and Tabaksblat were reappointed as members. At the same time Mr. Peters stepped down, having reached the retirement age of 70 years. To our great regret, Sir Michael Jenkins decided to resign per 1 December 2001, in order to avoid even the semblance of a conflict of interest because of his Executive position as Vice-Chairman of Dresdner Kleinwort Wasserstein, an integrated subsidiary of Allianz, the German insurance group. After Mr. Storḿ s retirement as Chairman of the Executive Board on 18 April 2002, the Supervisory Board intends to appoint him as a member of the Supervisory Board, from 1 July 2002. According to Dutch corporate law, shareholders and the Dutch Central Works Council (CWC) have the right to recommend or object. Shareholders will be able to exercise these rights during the AGM to be held on 18 April 2002. The Dutch CWC has raised no objections and has not recommended another candidate. The number of Supervisory Board members, currently nine, will once again rise to ten, in accordance with the Profile of the Supervisory Board. There will be no reappointments in 2002.
In 2003, Mr. Posthumus will reach the retirement age of 70, and will thus step down at the end of the AGM to be held in 2003. The Supervisory Board intends to fill this vacancy. The Dutch CWC and shareholders have the right to recommend candidates, the latter during the AGM on 18 April 2002.
The Chairman of the Supervisory Board attended a meeting of the CWC of AEGON The Netherlands in 2001 to discuss AEGON N.V.’s 2000 annual accounts, together with the Chairman of the Executive Board. Most Board members attended AEGON’s annual ‘Meeting on a Specific Theme’, together with members of the Executive Board, members of AEGON The Netherlands’ Management Board and members of the Dutch CWC. Several participated in the annual ‘AEGON University’ management development programs in Baltimore, USA, and in Nyenrode in the Netherlands, acting as guest speakers.
AEGON’s continued strong growth in 2001, a year that was dominated by adversity including the terrorist attacks in the USA on 11 September and subsequent further deterioration and volatility in the world economy in general and the financial markets in particular, reflects the strong commitment and dedication of the Executive Board and all the other members of the AEGON community worldwide. We congratulate them once again for their fine performance, their energy and professionalism in responding to rapidly changing markets, and for keeping AEGON on its long-standing growth track.
The Hague, 7 March 2002 On behalf of the Supervisory Board, Morris Tabaksblat, Chairman
Besides the Nominating Committee, the Board has constituted a further two committees from among its members which, without prejudice to the Board’s responsibility, will discuss certain subjects in more detail and advise the Board about them. The Compensation Committee prepares proposals concerning the remuneration of Executive Board members and the fees for Supervisory Board members. In the Audit Committee, the audit of the annual accounts as well as the ‘accounting principles’ are discussed each year with the external auditor, as well as the external auditor’s report about the internal control system. The tasks and working methods of the Audit Committee are laid down in a Charter for internal use. In 2002, a Strategy Committee will be established.
K.M.H. Peijs, 57, Dutch nationality, is a member of the European Parliament. She was appointed in 1992; her current term will end in 2004. She is also a Supervisory Board member of, among others, Royal Vendex KBB and DaimlerChrysler Nederland. Mrs. Peijs is a member of the Nominating Committee.
G.A. Posthumus, 69, Dutch nationality, is a member of the Council of State in the Netherlands. He was appointed in 1997; his term will end in 2003 when he will retire, then having reached the retirement age of 70. He is also a former member of the Executive Board of the I.M.F. Mr. Posthumus is also a member of the Audit Committee.
T. Rembe, 65, American nationality, is a partner of Pillsbury Winthrop LLP (San Francisco, USA). She was appointed in 2000; her current term will end in 2004. She is a member of the Board of Directors of Potlach Corporation (USA) and SBC Communications (USA). She is also a member of the Compensation Committee.
M. Tabaksblat, 64, Chairman and Dutch nationality, is Chairman of Reed Elsevier PLC and a retired Chairman and CEO of Unilever. He was appointed in 1990; his current term will end in 2005. He is also Chairman of the Supervisory Board of TNT Post Group and a member of the Advisory Board of Ernst & Young, and of the International Advisory Boards of Salomon Smith Barney (USA) and of Renault Nissan. Furthermore he is a member of the Executive Committee of Vereniging AEGON. Moreover, he is the Chairman of the Compensation, Nominating and Strategy Committee and a member of the Audit Committee.
F.J. de Wit, 62, Dutch nationality, is a former Chairman of the Executive Board of Koninklijke KNP BT. He was appointed in 1990; his current term will end in 2004. He is also a member of the Supervisory Boards of Océ and PontEecen. He is also a member of the Compensation and Strategy Committee.
Amounts in accordance with Dutch accounting principles 15,292 12,844 2,397 2,066
Real estate –847 –742 –61 –59 The Netherlands: appraisal value United States: cost less depreciation
Technical provisions (including deferred policy acquisition costs) 689 1,141 -96 –34 The Netherlands: calculated on recent assumptions United States: calculated on assumptions when the policy was issued or on recent assumptions
Realized gains and losses on shares and real estate — — –1,160 999 The Netherlands: realized gains and losses on shares and real estate are added to the revaluation account. From this reserve amounts are released to income, so that together with the direct yield, a 30 year moving average total rate of return is recognized.
In 2001 major differences between amounts on Dutch accounting principles and those on US accounting principles compared to the amounts of 2000 are explained as follows: Realized and unrealized gains and losses by their nature can show large fluctuations. The balance of other items includes the effect of the sale of Mexico (EUR 896 million in capital and reserves and EUR 343 million in earnings) which under US GAAP will be accounted for in 2002. In 2000 the result of the sale of Labouchere and of other divestitures has been included in the balance of other items.
USD 100 million 74/5% (Transamerica Corp.) 1996/26 Jun/Dec 1 113 107 USD 225 million 713/20% (Transamerica Corp.) 1996/26 Jun/Dec 1 255 242 USD 190 million 75/8% (Transamerica Corp.) 1997/37 May/Nov 15 216 204
Total long-term liabilities, subordinated loans and capital securities 7,855 6,528 1 Of which EUR 378 million relate to AEGON N.V. (2000: EUR 68 million). 2 Year of first call.
–108 –103 –89 –55 –355 Interest charges & Other –117 –118 –100 –62 –397
2000 USD 2000 EUR I II III IV Total I II III IV Total
–83 –82 –123 –121 –409 Interest charges & Other –84 –88 –134 –137 –443
–186 –194 –189 –200 –769 Corporation tax –188 –207 –209 –229 –833
Telephone: + 31 70 344 83 44 Fax: + 31 70 344 84 45 E-mail: groupcom@aegon.nl
The AEGON N.V. Annual General Meeting of Shareholders will be held at AEGON headquarters, AEGONplein 50, The Hague, the Netherlands on Thursday 18 April 2002 at 2.00 C.E.T.
6 April Purchase of 11.2 million of own common shares to hedge the outstanding obligations of the option plan for 2001 17 May Citigroup and Banacci reached an agreement that will result in the integration of Banacci as a member of Citigroup; AEGON to explore options resulting from the announced transaction 30 May AEGON launched USD 1.5 billion international offering of ordinary shares 18 June Completion of acquisition of direct marketing insurance operations from JC Penney 2 July Hedging 2001 stock-option plan completed 19 September Claims influence on earnings after tragic events in the USA estimated to be less than USD 30 million after reassurance 25 September AEGON receives license for life insurance activities in China 25 September AEGON Taiwan to acquire AXA’s Taiwanese life insurance activities 8 November Kees J. Storm, chairman of the Executive Board of AEGON N.V. to retire on 1 July 2002; Donald J. Shepard appointed as his successor on 18 April 2002 30 November AEGON confirms gross exposure to Enron of USD 300 million 30 November Sir Michael Jenkins steps down from AEGON N.V. Supervisory Board
Important dates 2002 18 April Annual General Meeting of Shareholders 22 April Start election period optional final dividend (up to and including 29 April)
The matters contained in this Annual Report may contain forward-looking statements that involve risks and uncertainties, including, but not limited to, currency and financial market movements, the effect of legislative and administrative changes, the effect of economic conditions, the impact of competitive products and pricing, and other risks. These risks and uncertainties could cause actual results to differ materially from those discussed in this report.