provisions for insurance liabilities, which may reduce Aegon’s income and solvency ratio. In addition, certain acquisition costs related to the sale of new policies and the purchase of policies already in force have been recorded as assets on the balance sheet and are being amortized into income over time. If the assumptions relating to the future profitability of these policies (such as future claims, investment income and expenses) are not realized, the amortization of these costs may be accelerated and may require write-offs should there be an expectation that the costs are not fully recoverable. This may have a materially adverse effect on Aegon’s results of operations and financial condition.
Estimates and assumptions Aegon makes in connection with hedging activities may fail to fully reflect or correspond to the actual
(longer term) exposure in respect of guarantees. Further, unexpected policyholder behavior may cause Aegon’s hedging to be less effective. The factors set forth above could have a material adverse effect on its results of operations, financial condition or liquidity.
derivatives, a counterparty’s failure to honor Aegon’s obligations or the systemic risk that failure is transmitted from counterparty to counterparty may each have a material adverse effect on Aegon’s businesses, results of operations and financial condition.
Models can be predictive in nature. The use of predictive Models has inherent risks. For example, such Models may incorrectly forecast future behavior, leading to potential losses on a cash flow and/or a mark-to-market basis. In addition, in unforeseen or certain low-probability scenarios (often involving a market disruption of some kind), such Models may produce unexpected results, which can result in losses for an investment product. Furthermore, the success of relying on or otherwise using Models depends on a number of factors, including the validity, accuracy and completeness of the Model’s development, implementation and maintenance, the Model’s assumptions, factors, algorithms and methodologies, and the accuracy and reliability of the supplied historical or other Data.
Aegon may be required to increase its technical provisions and/or hold higher amounts of regulatory capital as a result of changes in the regulatory environment or changes in rating agency analysis, which may decrease Aegon’s returns on its products.
Prudential regulatory requirements may not only apply to the individual entities in the group, but may additionally apply at sub-group or group level. Important examples of such requirements are Solvency II group supervision, as well as consolidated requirements resulting from the Capital Requirements Directive (CRD) and Capital Requirements Regulation (CRR), as applied to groups containing undertaking bank and/or asset management activities.
The manner in which such requirements are applied to groups like Aegon, has an impact on the group’s capital position, as well as on the availability of capital at group level and changes thereto may have an impact, depending on the nature of the change, on Aegon’s competitive position to competitors that are not subject to these or similar requirements at group level. As an example, as part of the Solvency II group calculation, Aegon uses, at group level, a specific methodology for its US insurance and reinsurance subsidiaries, in addition to the requirements these subsidiaries are subject to under their local prudential regime. This methodology is approved by Aegon’s group supervisor, De Nederlandsche Bank N.V. (DNB), but remains subject to annual review. For further detail on this methodology, we refer to the section ''Regulation and supervision'' of Aegon’s Annual Report 2018. Changes to this methodology might have an impact on Aegon’s capital position, as calculated under Solvency II group requirements and/or the manner in which DNB otherwise exercises group supervision on Aegon (such as more stringent requirements with respect to intra-group transactions, risk concentrations and reporting).
In addition, since November 3, 2015, Aegon has been classified as a Global Systematically Important Insurer (G-SII). While the qualification is reviewed by the Financial Stability Board (FSB) yearly, the FSB, in consultation with the International Association of Insurance Supervisors (IAIS) and national authorities, decided not to publish a new list of G-SIIs for 2017 or 2018. The policy measures set out in the FSB’s 2016 communication on G-SIIs will continue to apply to the firms listed in the 2016 communication.
In November 2018, the International Association of Insurance Supervisors (IAIS) published a consultation document for a holistic
In this respect, the development of ComFrame as well as any additional requirements or standards applicable to either systemic entities or activities could lead to enhanced capital requirements applicable to IAIGs, even if the FSB-list will be discontinued. This could adversely affect Aegon’s ability to compete with other insurers that are not subject to those capital requirements. These requirements may lead Aegon to engage in transactions that affect capital, constrain Aegon’s ability to pay dividends or repurchase its own shares.
Aegon may consider structural and other business alternatives in light of requirements or standards applicable with respect to systemic entities or activities, of which the impact on shareholders cannot be predicted.
Furthermore, the NAIC model regulation ‘Valuation of Life Insurance Policies’, (commonly known as Regulation XXX), requires insurers in the United States to establish additional statutory reserves for term life insurance policies with long-term premium guarantees.
Aegon and its subsidiaries are subject to laws and regulations in numerous jurisdictions in some cases including enforcement and supervision by different regulators with overlapping jurisdictions. Aegon may not be able to comply fully with, or obtain appropriate exemptions from, the wide variety of laws and regulations applicable to insurance companies, holding companies, groups of insurance companies and/or other financial undertakings and/or financial conglomerates. Failure to comply with or to obtain appropriate exemptions under any applicable laws and regulations may result in restrictions on Aegon’s ability to do business in one or more of the jurisdictions in which Aegon operates and may result in fines and other sanctions, which may have a materially adverse effect on Aegon’s businesses, financial position or results of operations.
Aegon has experienced downgrades and negative changes to its outlook in the past, and may experience rating and outlook changes in the future. A downgrade or potential downgrade, including changes in outlook, may result in higher funding costs and/or affect the availability of funding in the capital markets. In addition, a downgrade may adversely affect relationships with broker-dealers, banks, agents, wholesalers and other distributors of Aegon’s products and services, which may negatively impact new sales and adversely affect Aegon’s ability to compete. A downgrade of Aegon’s credit ratings will have an effect of increased fees on credit facilities and may result in higher funding costs on future long-term debt funding transactions and may affect its ability to obtain reinsurance contracts at reasonable prices or at all.
Aegon cannot predict what actions rating agencies may take, or what actions Aegon may take in response to the actions of rating agencies. As with other companies in the financial services industry, Aegon’s ratings may be downgraded at any time and without notice by any rating agency.
Additionally, the laws or regulations adopted or amended from time to time may be more restrictive or may result in higher costs than currently is the case, such as regarding the calculation of capital needs, storage, processing and transmission of personal and other information, treatment of own funds, rules or guidance with respect to the modelling of insurance, investment and other risks.
In addition, US state insurance regulators are developing group capital standards. The scope of application of these standards has not yet been determined. The current US administration announced plans to review aspects of the Dodd-Frank Act. This review may result in changes in laws and regulations that may impact US or global operations.
Supervisors, may lead to regulations that would increase capital needs and other requirements that would, if not adopted in whole or in part in the relevant markets in which Aegon is active, not be applicable to all insurance and reinsurance carriers and create an uneven competitive playing field.
In the United States, the Patient Protection and Affordable Care Act (PPACA) appears to be stable with the change in control of the US House of Representatives. But there may be additional changes in laws and regulations that may impact the US health insurance industry. The extent to which employers or individuals may discontinue their purchase of supplemental health insurance products as a result of any such changes may significantly impact Aegon USA's supplemental health insurance products business.
The extent of any such changes or the corresponding impact on Aegon USA's supplemental health insurance business cannot be determined at this time.
substantially broadened the definition of 'fiduciary' with respect to retirement savings and investment plans and products ('qualified assets'). The final rule, which was to fully take effect on July 1, 2019, was vacated in its entirety by the Fifth Circuit Court of Federal
Aegon believes the court’s invalidation of the DOL Rule will not materially impact prospective sales of Aegon America's retirement plan and annuity businesses. However, any new DOL proposal or promulgation of a heightened standard of care by the SEC, NAIC or any state may have a material adverse impact on Aegon America's business.
For example, on July 18, 2018, the New York Department of Financial Services (“NYDFS”) amended Regulation 187 which adopts a best interest standard in the sale of life insurance and annuities.
In addition, in April 2018, the SEC proposed a Best Interest standard of conduct regulation applicable to broker-dealers and their registered representatives. The proposed regulation requires additional disclosures to clients and imposes heightened mitigation requirements with respect to conflicts of interest. In addition to the proposed Regulation Best Interest, the SEC proposed the use of a written relationship disclosure with investment advisor clients and an interpretation of the standard of conduct applicable to investment advisors.
The United Kingdom (UK) leaving the European Union ('Brexit'), may affect Aegon’s results and financial condition.
On June 23, 2016 the United Kingdom voted in a national referendum to withdraw from the European Union. With continuing uncertainty on if and in what form a “Brexit-deal” will be reached and approved, the implications of 'Brexit' remain unclear, with respect to the European integration process, the relationship between the UK and the European Union, and the impact on economies and businesses. Aegon is prepared for all outcomes, including the worst case scenario. For this purpose, Aegon has assessed the risks and possible contingency measures specifically related to a hard Brexit (no-deal) scenario. Despite these efforts, Aegon could be adversely impacted by unexpected developments and market developments such as increased exchange rate movements of the UK pound versus the euro and higher financial market volatility in general due to increased uncertainty, any of which could reduce the value or results of Aegon’s operations. Aegon could also be adversely impacted should 'Brexit' result in the UK moving away from agreed and implemented EU legislation like, but not limited to, Solvency II regulations.
On January 1, 2019, the Dutch Act on Recovery & Resolution for Insurers (R&R Act) came into force in the Netherlands, replacing the previously applicable intervention regime for insurance companies in the Netherlands faced with financial difficulties.
Lastly, under Part 6 of the Dutch Financial Supervision Act, the Dutch Minister of Finance may intervene immediately, when the stability of the financial system is threatened by the situation of a financial institution, in which case legal or statutory provisions, applicable to the financial institution, might be surpassed. The intervention measures available to the Minister of Finance, include in particular the right to expropriate assets of the financial institution, as well as securities and/or other financial instruments issued by or with the cooperation of the financial instruments. The exercise of this power may significantly impact the rights of the owners or holders of these assets, securities and/or financial instruments.
There is a risk that the possible exercise of powers, or any perceived exercise of powers, by DNB or the Ministry of Finance could have a material adverse effect on the performance by the failing institution, including Aegon, of its obligations (of payment or otherwise)
under contracts of any form, including the expropriation, write-off, write-down or conversion of securities such as shares and debt obligations issued by the failing institution. The R&R Act, as well as the regime of the Bank Recovery and Resolution Directive is described in more detail in the section “Regulation and supervision” of Aegon’s Annual Report 2018.
Insurance companies and their affiliated regulated entities are routinely the subject of litigation, investigation and regulatory activity by various governmental and enforcement authorities, individual claimants and policyholder advocate groups, involving issues such as, but not limited to, employment or distribution relationships; operational and internal controls and processes; disclosures; environmental matters; competition and antitrust matters; data privacy; information security; intellectual property; and anti-money laundering, antibribery and economic sanctions compliance.
Many of Aegon’s products are affected by fluctuations in equity markets as well as interest rate movements, which may prove to be volatile or disappointing to customers. Significant investment risks are often borne by the customer. The existence of potential claims may remain unknown for long periods of time after the events giving rise to such claims. Determining the likelihood of exposure to Aegon and the extent of any such exposure may not be possible for long periods of time after Aegon becomes aware of such potential claims. Once litigation is initiated, it may be protracted and subject to multiple levels of appeal.
Aegon cannot predict the effect of litigation, investigations or other actions on its businesses or the insurance industry. In some jurisdictions, plaintiffs may seek recovery of very large or indeterminate amounts under claims of bad faith, resulting in punitive or treble damages. Damages alleged may not be quantifiable or supportable or may have no relationship to economic losses or final awards. Separate from financial loss, litigation, regulatory action, legislative changes or changes in public opinion may require Aegon to change its business practices, which could have a material adverse impact on Aegon’s businesses, results of operations, cash flows and financial position.
In addition, insurance companies and their affiliated regulated entities may face lawsuits that threaten their business models. For example, several US-based Aegon subsidiaries have been named in two purported class actions alleging that the business model inappropriately characterizes distributors as independent contractors instead of employees. Depending on the outcome, these lawsuits, along with similar claims against other companies, as well as regulatory action could necessitate a change in the distribution model and could result in significant settlements or judgments.
In the Netherlands, unit linked products (beleggingsverzekeringen) have been controversial and the target of litigation since 2005.
Allegations include excessive cost, unfair terms, inadequate disclosure, and failure to perform as illustrated. Consumer groups have formed to address these issues and initiate mass claims against insurers. Regulators as well as the Dutch Parliament have been involved ever since, with the principal goal of achieving an equitable resolution. Aegon has made improvements across its product lines, including after settlements reached in 2009 with Stichting Woekerpolis and Stichting Verliespolis. In 2013 Aegon took a charge of EUR 25 million after the Dutch Supreme Court ruled adversely in litigation concerning premium amounts charged in the KoersPlan product. Some of the unit linked products are still involved in ongoing litigation. In September 2014, consumer interest group
Lawsuits have also been brought against providers of securities leasing products (aandelenlease producten). Although sales of securities leasing products ended more than a decade ago, litigation relating to these products has resurfaced. In 2016, the Dutch
Supreme Court ruled on a case involving a securities leasing product sold by one of Aegon’s competitors. It decided that the financial institution was liable if a broker (remisier) that advised on the sale of the institution's products, was not properly licensed. In July 2016, consumer interest group Platform Aandelenlease filed a mass claim against Aegon Bank regarding securities leasing product
of The Hague. In addition, Aegon is involved in claims for compensation and the cancellation or nullification of contracts concerning the Vliegwiel product, a variation on securities leasing products. Currently, proceedings are pending before the Dutch courts and the Complaint Institute for Financial Services (‘Klachteninstituut Financiële Dienstverlening’), with numerous cases having been initiated by Leaseproces B.V.
Since 2005, Aegon’s financial statements have been prepared and presented in accordance with IFRS-EU. Any future changes in these accounting standards may have a significant impact on Aegon’s reported results, financial condition and shareholders' equity.
This includes the level and volatility of reported results and shareholders' equity. New accounting standards that are likely to have a significant impact on Aegon’s reported results, financial condition and shareholders' equity include but are not limited to IFRS 9 –
Further details are provided in the notes to the consolidated financial statements, note 2 "Significant accounting policies"
Most insurance products enjoy certain tax advantages, particularly in the United States, the United Kingdom and the Netherlands, which permit the tax deferred accumulation of earnings on the premiums paid by the holders of annuities and life insurance products under certain conditions and within certain limits. Taxes on this inside build-up of earnings may not be payable at all and, if payable, generally are due only when the earnings are actually paid.
Competition in Aegon’s business segments is based on service, product features, price, commission structure, financial strength, claims paying ability, ratings and name recognition. Aegon faces intense competition from a large number of other insurers, as well as noninsurance financial services companies such as banks, broker-dealers and asset managers, for individual customers, employers, other group customers, agents and other distributors of insurance and investment products. Consolidation in the global financial services industry can enhance the competitive position of some of Aegon’s competitors by broadening the range of their products and services, and increasing their distribution channels and their access to capital. In addition, development of alternative distribution channels for certain types of insurance and securities products, including using digital technologies and platforms, may result in increasing competition as well as pressure on margins for certain types of products. Traditional distribution channels are also challenged by the ban on sales- based commissions in some countries. These competitive pressures may result in increased pricing pressures on a number of products and services, particularly as competitors seek to win market share. This may harm Aegon’s ability to maintain or increase profitability
Aegon may be unable to adapt to and apply new technologies.
Although Aegon distributes its products through a wide variety of distribution channels, Aegon’s ability to market its products could be affected if key relationships are interrupted. Distributors may elect to reduce or terminate their distribution relationship with Aegon due to adverse developments in its business. Further, key distribution partners may also merge, change their business models in ways that affect how Aegon’s products are sold, or new distribution channels could emerge and adversely impact the effectiveness of its current distribution efforts.
'systemic risk' and may adversely affect financial intermediaries, such as clearing members or futures commissions merchants, clearing houses, banks, securities firms and exchanges with which Aegon interacts on a daily basis and financial instruments of governments which Aegon invests in. Systemic risk could have a material adverse effect on Aegon’s ability to raise new funding and on its business, financial condition, results of operations, liquidity and/or prospects. In addition, such distress or failure could impact future product sales as a potential result of reduced confidence in the financial services industry.
Aegon may be unable to retain personnel who are key to the business.
Aegon’s Annual Report 2018 for a table showing life insurance in force amounts and premiums on a direct, assumed and ceded basis.
As part of Aegon’s overall risk and capital management strategy, Aegon purchases reinsurance for certain risks underwritten by Aegon’s various business segments. Market conditions beyond Aegon’s control determine the availability and cost of the reinsurance protection Aegon purchases. In addition, interpretations of terms and conditions may differ over time as contracts extend for decades.
Accordingly, Aegon may be forced to incur additional expenses for reinsurance or may not be able to obtain or enforce sufficient reinsurance on acceptable terms, which may adversely affect Aegon’s ability to write future business and realize planned value for current business.
In recent years, Aegon has made a number of acquisitions and divestitures around the world and it is possible that Aegon may make further acquisitions and divestitures in the future. Growth by acquisition involves risks that may adversely affect Aegon’s operating results and financial condition. These include: the potential diversion of financial and management resources from existing operations; difficulties in assimilating the operations, technologies, products and personnel of the acquired company; significant delays in completing the integration of acquired companies; the potential loss of key employees or customers of the acquired company; potential losses from unanticipated litigation and tax and accounting issues. In addition, expansion into new and emerging markets may involve heightened political, legal and regulatory risks, such as discriminatory regulation, nationalization or expropriation of assets, price controls and exchange controls.
Aegon takes actions on all mentioned aspects of climate risks. Aegon seeks to reduce its exposure to the physical risks through risk selection, risk monitoring, and purchasing reinsurance. Furthermore, Aegon assesses and takes action on the transition risks of climate change with respect to its businesses and through its responsible investment activities and disclosures. More details on Aegon’s responsible investment and climate change activities can be found in the strategy section of this annual report. Despite these actions and given the significant uncertainties related to climate change and the long-term nature of the issue, it cannot be ruled out that climate change may lead to losses to Aegon’s businesses, the investment portfolios it manages and to its corporate reputation.
Aegon’s operating results and financial position may be adversely affected by volatile natural and man-made disasters such as hurricanes, windstorms, earthquakes, terrorism, riots, fires and explosions, pandemic disease and other catastrophes. Over the past several years, changing weather patterns and climatic conditions have added to the unpredictability and frequency of natural disasters
Aegon may face claims from customers, both individual claimants as well as policyholder advocate groups, and negative publicity if Aegon’s products result in losses or fail to result in expected gains, regardless of the suitability of products for customers or the adequacy of the disclosure provided to customers by Aegon and by the intermediaries who distribute Aegon’s products. New products that are less well understood and that have less of a historical performance track record may be more likely to be the subject of such claims. Any such claims may have a materially adverse effect on Aegon’s results of operations, corporate reputation and financial condition.
Operational risk is inherent in Aegon’s businesses and may manifest itself in many ways, including business interruption, poor vendor performance, information systems malfunctions or failures, regulatory breaches, cyber intrusions, failure to protect data, processing errors, modeling errors, and/or internal and external fraud. These events may result in financial loss, harm Aegon’s reputation, or hinder
Operational risk is part of the business environment in which Aegon operates, and is inherent in Aegon’s size and complexity, as well as Aegon’s geographic diversity, and the scope of the businesses Aegon operates. Aegon’s risk management activities cannot anticipate every circumstance, and economic and financial outcome, or the specifics and timing of such outcomes. Furthermore, if the contractual arrangements put in place with any third-party service providers are terminated, including contractual arrangements with providers of information technology, administrative or investment management services, Aegon may not be able to find an alternative provider on a timely basis or on equivalent terms. Aegon may incur significant losses due to these types of risks.
As Aegon continues to focus on reducing expenses necessary to support its business, a key part of its operating strategy has been to outsource certain services that are important to its business. Aegon outsources certain information technology, finance and actuarial services, investment management services and policy administration operations to third-party providers and may do so increasingly in the future. If Aegon fails to maintain an effective outsourcing strategy or if third-party providers do not provide the core administrative, operational, financial, and actuarial services Aegon requires and anticipates, or perform as contracted, such as compliance with applicable laws and regulations, or suffer a cyber-attack or other security or privacy breach, Aegon may not realize the productivity improvements or cost efficiencies or customers might experience lower service levels. In addition,
on Aegon’s results of operations. In addition, Aegon’s reliance on third-party providers does not relieve Aegon of its responsibilities and requirements. Any failure or negligence by such third-party providers in carrying out their contractual duties may result in Aegon being subjected to liability and litigation. Any litigation relating to such matters could be costly, time-consuming, and the outcome would be uncertain. Moreover, any adverse publicity arising from such litigation, even if the litigation is not successful, could adversely affect Aegon’s reputation and distribution of its products. Finally, Aegon’s ability to receive services from third-party providers based in different countries might be impacted by political instability, cultural differences, regulatory requirements or policies inside or outside of the countries within which Aegon has operations. As a result, Aegon’s ability to conduct its business might be adversely affected.
Aegon relies heavily on computer and information systems and internet and network connectivity to conduct a large portion of its business operations. This includes the need to securely store, process and transmit confidential information, including personal information, through a number of complex systems. In many cases this also includes transmission and processing to or through commercial customers, business partners and third-party service providers. The introduction of new technologies, computer system failures, cyber-crime attacks or security or privacy breaches may materially disrupt Aegon’s business operations, damage
To date the highest impact information security incidents that Aegon has experienced are believed to have been the result of e-mail phishing attacks targeted at Aegon’s business partners and commercial customers. This in turn led to unauthorized use of valid Aegon website credentials to engage in fraudulent transactions and improper data exfiltration. Additionally, Aegon has also faced other
types of attacks, including but not limited to other types of phishing attacks and distributed denial of service (DDoS) attacks. Although to Aegon’s knowledge these events have thus far not been material in nature, Aegon management believes that significant investment will be required to establish and maintain adequate information security systems that are capable of addressing the possibility of these types of attacks, as well as for the possibility of more significant and sophisticated information security attacks, in the future. There is no guarantee that the measures that Aegon takes will be sufficient to stop all types of attacks or mitigate all types of information security or privacy risks.
Aegon maintains cyber liability insurance to help decrease the impact of cyber-attacks and information security events, subject to the terms and conditions of the policy, however such insurance may not be sufficient to cover all applicable losses that
A breach of data privacy or security obligations may disrupt Aegon’s business, damage Aegon’s reputation and adversely affect financial conditions and results of operations.
Pursuant to applicable laws, various government agencies and independent administrative bodies have established numerous rules protecting the privacy and security of personal information and other confidential information held by Aegon. For example, certain of our businesses are subject to laws and regulations enacted by U.S. federal and state governments, the E.U. or other non-U.S. jurisdictions and/or enacted by various regulatory organizations relating to the privacy and/or security of the information of customers, employees or others. Effective May 25, 2018, the General Data Protection Regulation (GDPR) took effect in the E.U.
Compared to the previous directive, the GDPR, among other things, increased compliance obligations, impacted our businesses’
There is no treaty between the United States and the Netherlands providing for the reciprocal recognition and enforcement of judgments (other than arbitration awards) in civil and commercial matters. Judgments of US courts, including those predicated on the civil liability provisions of the US federal securities laws, may not be enforceable in Dutch courts. Therefore, Aegon’s investors that obtain a judgment against Aegon in the United States may not be able to require Aegon to pay the amount of the judgment unless a competent court in the Netherlands gives binding effect to the judgment. It may, however, be possible for a US investor to bring an original action in a Dutch court to enforce liabilities against Aegon, Aegon’s affiliates, directors, officers or any expert named therein who resides outside the United States, based upon the US federal securities laws.
Aegon’s operations, and some of which are related to the insurance industry and equity markets in general. As a result of these factors, investors may not be able to resell their common shares at or above the price paid for them. In particular, the following factors, in addition to other risk factors described in this section, may have a material impact on the market price of Aegon’s common shares:  Investor perception of Aegon as a company;  Actual or anticipated fluctuations in Aegon’s revenues or operating results;  Announcements of intended acquisitions, disposals or financings, or speculation about such acquisitions, disposals or financings;  Changes in Aegon’s dividend policy, which may result from changes in Aegon’s cash flow and capital position;  Sales of blocks of Aegon’s shares by significant shareholders, including Vereniging Aegon;  A downgrade or rumored downgrade of Aegon’s credit or financial strength ratings, including placement on credit watch;  Potential litigation involving Aegon or the insurance industry in general;  Changes in financial estimates and recommendations by securities research analysts;  Fluctuations in capital markets, including foreign exchange rates, interest rates and equity markets;  The performance of other companies in the insurance sector;  Regulatory developments in the United States, the Netherlands, the United Kingdom, and other countries in which Aegon operates;  International political and economic conditions, including the effects of terrorist attacks, military operations and other developments stemming from such events, and the uncertainty related to these developments;  News or analyst reports related to markets or industries in which Aegon operates; and  General insurance market conditions.
Aegon may decide to offer additional common shares in the future, for example, to strengthen Aegon’s capital position in response to regulatory changes or to support an acquisition.
Aegon held 279,236,609 common shares and 571,165,680 common shares B. All of Aegon’s outstanding common shares are freely tradable, and all shareholders, including large shareholders such as Vereniging Aegon, are free to resell their common shares at any time.
Vereniging Aegon holds 32.6% of the voting shares. For details on the shareholding of Vereniging Aegon its developments, the Amended 1983 Merger Agreement and the Voting Rights Agreement – please see the section Major shareholders on pages 334-336.
Aegon’s common shares may also be depressed by the issue of common shares upon mandatory conversion of any convertible securities or by the acceleration of any convertible securities (or other such securities) that Aegon has issued by investors who view such convertible securities (or other such securities) as a more attractive means of participation in Aegon’s equity. Negative results may also be produced by hedging or arbitrage trading activity that may develop involving such convertible securities (or other such securities) and Aegon’s common shares. Any such developments may negatively affect the value of Aegon’s common shares.
Other principal offices owned by Aegon are located in The Hague, the Netherlands and Budapest, Hungary. Aegon owns its headquarters and leases other offices in the Netherlands (Amsterdam, Leeuwarden and Groningen), in the United Kingdom and in Spain under long-term leases. Aegon believes that its properties are adequate to meet its current needs.
Employees and labor relations At the end of 2018, Aegon had 26,543 employees. Approximately 33% are employed in the Americas, 37% in Europe, 24% in Asia and 6% in Asset Management. Note that employees of the Holding are included in Europe.
Aegon uses cash flows from its operating subsidiaries to pay holding expenses, including funding costs. The remaining cash flow is available to execute Aegon’s strategy and to fund dividends on its shares, subject to maintaining holding company targeted capital.
The offer and listing The principal market for Aegon’s common shares is Euronext Amsterdam, where they are listed under the symbol “AGN”.
The offer and listing The offer and listing The offer and listing The offer and listing
Provisions that would have the effect of delaying a change of control A resolution of the General Meeting of Shareholders to suspend or dismiss a member of the Executive Board or a member of the Supervisory Board, other than pursuant to a proposal by the Supervisory Board, shall require at least two-thirds of the votes cast representing more than one-half of the issued capital.
Threshold above which shareholder ownership must be disclosed There are no such provisions in the Articles of Association. Dutch law requires public disclosure with the Authority for Financial Markets with respect to the ownership of listed shares when the following thresholds are met: 3%, 5%, 10%, 15%, 20%, 25%, 30%, 40%,
This section does not address the Netherlands corporate and individual income tax consequences for: i. Investment institutions (fiscale beleggingsinstellingen); ii. Pension funds, exempt investment institutions (vrijgestelde beleggingsinstellingen) or other entities that are exempt from
Generally speaking, a shareholding is considered to qualify as a participation for the participation exemption if it represents an interest of 5% or more of the nominal paid-up share capital; iv. Holders of Aegon common shares holding a substantial interest (aanmerkelijk belang) or deemed substantial interest (fictief aanmerkelijk belang) in Aegon and holders of Aegon common shares of whom a certain related person holds a substantial interest in Aegon. Generally speaking, a substantial interest in Aegon arises if a person, alone or, where such person is an individual, together with his or her partner (statutory defined term), directly or indirectly, holds or is deemed to hold (i) an interest of 5% or more of the total of capital issued by Aegon or 5% or more of the issued capital of a certain class of Aegon shares, (ii) rights to acquire, directly or indirectly, such interest or (iii) certain profit-sharing rights in Aegon; v. Persons to whom the Aegon common shares and the income from the Aegon common shares are attributed based on the separated private assets (afgezonderd particulier vermogen) provisions of the Netherlands Income Tax Act 2001 (Wet inkomstenbelasting 2001); vi. Entities which are resident in Aruba, Curacao or Sint Maarten that have an enterprise which is carried on through a permanent establishment or a permanent representative on Bonaire, Sint Eustatius or Saba, to which permanent establishment or permanent representative the Aegon common shares are attributable; vii. Holders of Aegon common shares which are not considered the beneficial owner (uiteindelijk gerechtigde) of these shares or of the benefits derived from or realized in respect of the Aegon common shares; and viii. Individuals to whom Aegon common shares or the income therefrom are attributable to employment activities which are taxed as employment income in the Netherlands.
Dividend withholding tax Withholding requirement Aegon is required to withhold 15% Netherlands dividend withholding tax in respect of dividends paid on its common shares.
Dividend Withholding Tax Act 1965 (Wet op de dividendbelasting 1965), dividends are defined as the proceeds from shares, which include: i. Direct or indirect distributions of profit, regardless of their name or form; ii. Liquidation proceeds, proceeds on redemption of Aegon common shares and, as a rule, the consideration for the repurchase of its own common shares by Aegon in excess of the average paid-in capital recognized for Netherlands dividend withholding tax purposes, unless a particular statutory exemption applies; iii. The nominal value of new common shares issued to a holder of Aegon common shares or an increase of the nominal value of Aegon common shares, except insofar as the (increase in the) nominal value of Aegon common shares is funded out of its paid-in capital as recognized for Netherlands dividend withholding tax purposes; and iv. Partial repayments of paid-in capital recognized for Netherlands dividend withholding tax purposes, if and to the extent there are qualifying profits (zuivere winst), unless Aegon’s General Meeting of Shareholders has resolved in advance to make such repayment and provided that the nominal value of Aegon common shares concerned has been reduced by an equal amount by way of an amendment of the Articles of Association. The term “qualifying profits” includes anticipated profits that have yet to be realized.
Non-residents of the Netherlands If a holder of Aegon common shares is a resident of a country other than the Netherlands and if a treaty for the avoidance of double taxation with respect to taxes on income is in effect between the Netherlands and that country, and such holder is a resident for the purposes of such treaty, such holder may, depending on the specific terms of that particular treaty, qualify for full or partial relief at source or for a refund in whole or in part of the Netherlands dividend withholding tax.
Beneficial owner A recipient of proceeds from Aegon common shares will not be entitled to any exemption, reduction, refund or credit of Netherlands dividend withholding tax if such recipient is not considered to be the beneficial owner of such proceeds. The recipient will not be considered the beneficial owner of these proceeds, if, in connection with such proceeds, the recipient has paid a consideration as part of a series of transactions in respect of which it is likely:  That the proceeds have in whole or in part accumulated, directly or indirectly, to a person or legal entity that would: (i) as opposed to the recipient paying the consideration, not be entitled to an exemption from dividend withholding tax; or (ii) in comparison to the recipient paying the consideration, to a lesser extent be entitled to a reduction or refund of dividend withholding tax; and  That such person or legal entity has, directly or indirectly, retained or acquired an interest in Aegon common shares or in profit sharing certificates or loans, comparable to the interest it had in similar instruments prior to the series of transactions being initiated.
Non-residents of the Netherlands If a person is neither a resident nor is deemed to be a resident of the Netherlands for Netherlands corporate or individual income tax purposes, such person is not subject to Netherlands income tax in respect of income derived from Aegon common shares and gains realized upon the redemption or disposal of Aegon common shares, except if: i. The person is not an individual and (1) has an enterprise that is, in whole or in part, carried on through a permanent establishment or a permanent representative in the Netherlands to which permanent establishment or a permanent representative Aegon common shares are attributable, or (2) is, other than by way of securities, entitled to a share in the profits of an enterprise or a coentitlement to the net worth of an enterprise, which is effectively managed in the Netherlands and to which enterprise Aegon common shares are attributable. This income and these gains are subject to Netherlands corporate income tax at up to a maximum rate of 25%; ii. The person is an individual that (1) has an enterprise or an interest in an enterprise that is, in whole or in part, carried on through a permanent establishment or a permanent representative in the Netherlands to which permanent establishment or permanent representative Aegon common shares are attributable, or (2) realizes income or gains with respect to Aegon common shares that qualify as income from miscellaneous activities (resultaat uit overige werkzaamheden) in the Netherlands which include activities with respect to Aegon common shares that exceed regular, active portfolio management (normaal, actief vermogensbeheer), or (3)
Gift and Inheritance Tax Act 1956. A gift made under a condition precedent is deemed to be made at the time the condition precedent is fulfilled.
Member States. Generally, it would apply to certain dealings in Aegon common shares where at least one party is a financial institution, and at least one party is established in a participating Member State. A financial institution may be, or be deemed to be,
'established' in a participating Member State in a broad range of circumstances, including (1) by transacting with a person established in a participating Member State or (2) where the financial instrument which is subject to the dealings is issued in a participating
or more of the voting shares of Aegon;  Partnerships, or arrangements treated as partnerships for US tax purposes, or pass-through entities or persons who hold common shares through partnerships or other pass-through entities; and  Holders that have a 'functional currency' other than the US dollar.
Certain 'qualified dividend income' received by certain non-corporate US holders is taxed at a maximum income tax rate of 20%
under current law. Only dividends received from US corporations or from a 'qualified foreign corporation' and on shares held by a non-corporate US holder for a minimum holding period (generally, 61 days during the 121-day period beginning 60 days before the exdividend date) can qualify for this reduced rate. Aegon is eligible for benefits under the comprehensive income tax treaty between the Netherlands and the US; therefore, Aegon should be considered a 'qualified foreign corporation' for this purpose. Accordingly, dividends paid by Aegon to non-corporate US holders on shares held for the minimum holding period may qualify for a reduced income tax rate. Each US holder should consult their tax advisor regarding the applicable tax rate.
Distributions paid in currency other than US dollars (a 'foreign currency'), including the amount of any withholding tax thereon, must be included in the gross income of a US holder in an amount equal to the US dollar value of the foreign currency calculated by reference to the exchange rate in effect on the date of receipt. This is the case regardless of whether the foreign currency is converted into US dollars. If the foreign currency is converted into US dollars on the date of receipt, a US holder generally should not be required to recognize foreign currency gain or loss in respect of the dividend. If the foreign currency received in the distribution is not converted into US dollars on the date of receipt, a US holder will have a basis in the foreign currency equal to its US dollar value on the date of receipt. Any gain or loss on a subsequent conversion or other disposition of the foreign currency will be treated as ordinary income or loss.
In general, upon making a distribution to shareholders, Aegon is required to remit all Dutch dividend withholding taxes to the Dutch tax authorities. The full amount of the taxes so withheld should (subject to certain limitations and conditions) be eligible for the US holder's foreign tax deduction or credit as described above. Investors are urged to consult their tax advisors regarding the general creditability or deductibility of Dutch withholding taxes.
Sale or other disposition of shares Upon the sale or exchange of common shares, a US holder will generally recognize gain or loss for US Federal income tax purposes on the difference between the US dollar value of the amount realized from such sale or exchange and the tax basis in those common shares. This gain or loss will be a capital gain or loss and will generally be treated as from sources within the United States. Investors should consult their tax advisors with respect to the treatment of capital gains (which may be taxed at lower rates than ordinary income for taxpayers who are individuals, trusts or estates that have held the common shares for more than one year) and capital losses (the deductibility of which is subject to limitations).
Passive foreign investment company considerations Generally effective January 1, 2018 the U.S. Tax Cuts and Jobs Act (Tax Act) amended certain provisions of the U.S. Internal Revenue
However, this is a factual determination that must be made annually after the close of each taxable year. If Aegon were treated as a
PFIC in any year during which a U.S. investor owns common shares or any other equity in Aegon, certain adverse tax consequences could apply to such U.S. investor. Investors should consult their tax advisors with respect to any PFIC considerations.
Audit Committee pre-approval policies and procedures Aegon’s Audit Committee is responsible, among other matters, for the oversight of the external auditor. The Audit Committee has adopted a policy regarding pre-approval of audit and permissible non-audit services provided by Aegon’s independent auditors (the Preapproval Policy).
For the period 2016 to 2018, all services provided to Aegon by its independent public accountant were pre-approved by the Audit
New premium production accident and health insurance 213 95 308 473 303 776
Half year results – unaudited Half year results – unaudited Half year results – unaudited Half year results – unaudited
Other non-financial data Data on Aegon’s environmental, social and governance performance has been grouped according to stakeholder
New customers 3.8 million NM NA NM Customers with two or more products (as % of total customers) 18% NM NA NM
Customer investments in ethical or SRI funds5 EUR 3.4 billion EUR 3.0 billion 13.4% EUR 2.4 billion 203-1 1 Please note this number has been restated; this follows a recalculation of the number of Aegon customers in Brazil. Total number of customers for 2017 was originally reported as 29.0 million. 2 Table shows NPS performance benchmarked against peers for Aegon businesses in the US, Netherlands and UK. Results from Knab, our online bank in the
3 Includes all written and verbal complaints. 4 Total for 2016 includes a one-off item relating to the acquisition of Mercer US’ defined contribution pension business. 5 Excludes separate green or SRI (Socially Responsible Investment) funds managed by AIFMC in China.
Total employment costs EUR 2.1 billion EUR 2.2 billion (7.7%) EUR 2.3 billion 201-1
Commissions paid to brokers and other intermediaries EUR 2.4 billion EUR 2.7 billion (8.1%) EUR 2.9 billion
Premiums paid to reinsurers EUR 2.7 billion EUR 3.4 billion (22.4%) EUR 3.2 billion
% of goods and services spend covered by a Supplier Sustainability Declaration 25% NM NA NM
Coupon payments EUR 291 million EUR 282 million 3.1% EUR 283 million 201-1
Cash donations EUR 9.3 million EUR 8.1 million 15.1% EUR 7.8 million 201-1
Volunteering1 EUR 0.7 million EUR 0.8 million (12.1%) EUR 1.0 million
Impact investments3 EUR 8.4 billion EUR 8.1 billion 3.5% EUR 7.2 billion
Americas (EUR 35 million) (EUR 293 million) NA EUR 48 million
The Netherlands EUR 3 million EUR 70 million NA EUR 64 million
Taxes collected on behalf of others EUR 2.16 billion EUR 2.22 billion NA EUR 2.17 billion
2 Number of hours spent by Aegon employees volunteering on local community projects during the year. 3 Impact investments are defined as those investments that meet minimum financial return requirements, but which also deliver specific social and /or environmental benefits. 4 Please note, there is often no direct correlation between tax on earnings for any given year and amounts paid or received in tax. Part of the explanation for this is that certain tax-deductible items are not recognized in the Company’s profit & loss statement but directly in equity. Amounts may include payments from other years. The US corporate income tax refund is related to a refund of taxes from prior year losses. Furthermore, the 2018 US tax liability will be satisfied entirely by low income housing, energy, foreign withholding and other tax credits.
emissions are calculated using the market-based method, while gross emissions are calculated using the location-based method.
Average emissions by employee are weighted by revenue and cover workforces in the US, UK, Netherlands and at Aegon’s asset management business only. Please note that Aegon has been carbon neutral since August 2016 (by reducing emissions from the Company’s own operations and supporting offset projects in China, India and Turkey. These offset projects were selected in cooperation with NGO ClimateCare). The significant decrease in emissions in 2017 was due mainly to reductions in business operations.
The scope of our non-financial reporting is determined by two factors: a) the relative size of our businesses and b) the potential impact on overall Group performance or strategy. Consequently, we focus reporting on our four largest operating segments
(Americas, the Netherlands, UK and Asset Management). We have excluded all divested businesses, as well as all joint ventures and associates in which Aegon does not have a majority shareholding.
For a more detailed overview, see page 424. Aegon reports impact on both its business and its immediate stakeholders
Reporting scope by operating segment, page 424). To determine materiality, Aegon takes into account various factors, which may affect long-term value creation. These include potential risks, impact on earnings, brand, reputation, strategy, customer loyalty and recruitment, as well as Aegon’s ability to deliver long-term growth and returns to investors.
We carry out a regular materiality assessment. Results from our latest assessment may be found on page 18. For this assessment, we compile an initial list of material topics, based on internal discussions and a thorough media review.
Stakeholders and Aegon management are then asked to rate the importance of each of these topics. For our 2018 assessment, the following topics were rated:  Reputation & trust  Cyber security & information security  Low interest rates  Changing consumer behavior  New technologies & digital transformation  Transparent and suitable products & services  Appropriate use of customer data  Big data and data analytics  Attracting and retaining talented employees  Increased regulation in financial services  Aging  Social and environmental impacts of business activities and investments  Partnerships  Non-traditional competitors  Diversity, inclusion and equal opportunities  De-globalization
Aegon’s business, profitability, reputation and /or ability to create long-term value for stakeholders and society.
Customer centricity NPS is based on the question: ‘how likely is that you would recommend Aegon/Transamerica to a friend or colleague?’. Answers are on a scale of 0-10; those answering 9 or 10 are ‘promoters’; those scoring 6 or below are detractors. NPS = % of promoters minus % of detractors. We benchmark our NPS scores annually against those of our peers in our main markets for retail customers (corporate and institutional customers are not benchmarked). All Aegon businesses in the Netherlands and UK are included in our benchmark, plus our retirement, life insurance and mutual funds businesses in the US. In the UK, the required sample size is obtained by an additional sample directly taken from Aegon UK’s customer base (additional to the study’s panel participants). Scores are weighted based on the number of customers in each business.
Based on Aegon’s annual employee survey. Engagement is defined as ‘the level of connection, motivation and commitment a person feels for the place they work’. Aegon uses four dimensions to determine employee engagement: • I see myself still working at this company in two years’ time. • I am proud to work for this company. • The company motivates me to go beyond expectations. • I would recommend this company as a great place to work.
Number of customers with two or more Aegon products ● ● ● ● ● ● ● NA
Total employment costs ● ● ● ● ● ● ● ●
Incidents of fraud involving employees, intermediaries and third parties ● ● ● ● ● ● ● ●
Reference tables Global Reporting Initiative (GRI) standards This report has been prepared in accordance with the latest
GRI reporting standards comprise universal and topic-specific standards. Universal standards include:  GRI 101 (Foundation, covering reporting principles)  GRI 102 (General Disclosures, covering organizational profile, strategy, ethics and integrity, stakeholder engagement and reporting practices)  GRI 103 (Management approach)
Reference tables Reference tables Reference tables Reference tables  Global Reporting Initiative (GRI) standards
(Our stakeholders – page 16) • Details of approach to stakeholder engagement and dilemmas (Dilemmas /Engagement – page 16) • Key aspects of relationships with stakeholders
Note: We also incorporate stakeholder views into our materiality process (page 17); risks and opportunities are explained in terms of impact on stakeholders (page 19).
page 17) • Description of risks and opportunities associated with these material topics as they affect: • Main stakeholder groups • Aegon’s business, profitability, strategy, reputation etc.
1.5 Accuracy The reported information shall be sufficiently accurate and detailed for stakeholders to assess the reporting organization’s performance.
1.8 Comparability The reporting organization shall select, compile and report information consistently. The reported information shall be presented in a manner that enables stakeholders to analyze changes in the organization’s performance over time, and that could support analysis relative to other organizations.
Note: This is Aegon’s first fully combined Annual Report; we have used the GRI and IIRC frameworks for several years, providing a stable basis of comparison. All metrics in this Report are provided with previous year performance, where possible.
1.10 Timeliness The reporting organization shall report on a regular schedule so that information is available in time for stakeholders to make informed decisions.
Basis of preparation • Details of reporting schedule (Scope and reporting boundaries – page 421)
Organizational profile 102-1 Name of the organization Page 8 (Aegon today) Page 10 (Our Businesses)
102-2 Activities, brands, products and services Page 8 (Aegon today) Page 10 (Our Businesses)
102-12 External initiatives Page 6 (Main events of 2018) Page 21 (Our strategy)
102-13 Membership of associations Page 21 (Secure retirement and healthy aging) Page 434 (UN Principles for Sustainable Insurance)
Strategy 102-14 Statement from senior decision-maker Page 4 (Letter from our CEO) Page 98 (Statement of Materiality, Significant Audiences and Responsibilities)
102-15 Key impacts, risks, and opportunities Page 17 (Our material topics) Page 19 (Our material topics - risk and opportunities)
102-17 Mechanisms for advice and concerns about ethics Page 27 (Culture and values) Page 66 (Non-financial policies, procedures and outcomes) Page 69 (Code of Conduct)
102-23 Chair of highest governance body Page 40 (Letter from Chairman of the Supervisory Board) Page 49 (Members of the Supervisory Board)
102-33 Communicating critical concerns Page 17 (Our operating environment - Our material topics) Page 90 (Risk management)
102-36 Process for determining remuneration Page 32 (Employees - Salaries and benefits) Page 59 (Remuneration Report)
102-39 Percentage increase in annual total compensation ratio Page 418 (Other non-financial data)
Stakeholder engagement 102-40 List of stakeholder groups Page 16 (Stakeholder engagement)
102-41 Collective bargaining agreements Page 27 (Culture and values) Page 32 (Diversity and inclusion)
Page 1 (Welcome to Aegon's 2018 Annual Report) Page 421 (Basis of preparation)
Note: for this Report, Aegon decided not to seek external assurance for its non-financial information. This is to allow time for further improvements to be made to its reporting and internal data collection processes.
Cyber & information security Page 19 (Degree of influence or control /risks and opportunities)
Low interest rates Page 20 (Degree of influence or control /risks and opportunities)
Changing consumer behavior Page 20 (Degree of influence or control /risks and opportunities)
Changing consumer behavior Page 21 (Financial security and well-being) Page 21 (Secure retirement and healthy aging)
Evaluation of the management approach 103-3 Reputation & trust Page 21 (Financial security and well-being) Page 21 (Secure retirement and healthy aging) Page 22 (Clean energy and sustainable real estate)
New technologies & digital transformation Page 7 (Performance highlights) Page 21 (Financial security and well-being) Page 27 (Culture and values) Page 29 (Non-financial indicators) Page 418 (Other non-financial data)
Low interest rates Page 21 (Financial security and well-being) Page 23 (Building strong foundation for our business) Page 78 (Sensitivities)
Changing consumer behavior Page 7 (Performance highlights) Page 21 (Financial security and well-being) Page 21 (Secure retirement and healthy aging) Page 27 (Culture and values) Page 30 (Value created and shared with our customers) Page 29 (Non-financial indicators) Page 418 (Other non-financial data)
Material topics: • Reputation & trust • New technologies & digital transformation Strategy: financial security and well-being
418-1 Substantiated complaints concerning breaches of customer privacy and losses of customer data
Share in profit of joint ventures and associates 216 172 140
International Integrated Reporting Council (IIRC) framework Table below shows Aegon’s compliance with the IIRC’s IR framework. For more information, see www.integratedreporting.org.
1 All page numbers in this table refer to Aegon's 2018 Annual Report, unless otherwise stated. Where there are several examples, we have included principal references only.
EU on non-financial reporting. All companies with 500 employees or more are required to publish non-financial information
Description of policies relating to environmental, social and employee matters (including due diligence processes implemented)
Non-financial policies, procedures and outcomes (page 66) Decree non-financial information (article 3.1.b)
Principal risks related to environmental, social and employee matters and how these risks are managed
Our material topics (page 17) Risk factors (page 396) Risk management (page 90)
Description of diversity policy applied to administrative, management and supervisory bodies
UN Principles for Sustainable Insurance (PSI) As a signatory, Aegon reports each year on actions taken to implement the PSI’s four commitments: Principles Actions taken (2018)
ESG factors are embedded in our Company policies, guidelines and procedures (see Non-financial policies, procedures and outcomes – page 66)
4. We will demonstrate accountability and transparency in regularly disclosing publicly our progress in implementing the Principles.
 EU directive on Non-Financial Information  UN Principles for Sustainable Insurance (PSI)
UN Sustainable Development Goals (SDG) In September 2015, the UN adopted new Sustainable
Development Goals (SDGs). These goals cover poverty reduction, education, gender equality, climate change and health. Behind each of these goals is a series of targets and indicators.
These specific targets, we believe, are most relevant to our business and strategy. This is also where, as a company, we can best support the international sustainable development agenda. The choice of these targets reflect essentially two factors: the nature of our business (as a provider of financial services) and our geographical footprint (the majority of our businesses are located in developed economies, though we do have operations in a number of upper and lower middle-income countries). The table below shows our contribution both to our chosen SDGs and, where applicable, to the other twelve goals
cooperation with National Foundation for Credit Counseling in US (page 31) • Strengthening financial literacy through local initiatives and programs (page 31)
Contribution to target 8.10 • Support for economic growth and job creation through our businesses and investments
• Launch of new innovation fund for small and medium-sized companies in the Netherlands (page 6)
• Participation in B3i, an industry initiative to use blockchain to speed up reinsurance transactions (page 17)
• Investment in new, innovative technology companies through Transamerica Ventures (page 10)
• Local diversity and inclusion initiatives (page 32) • Products for low-income customers (page 31) • Research into longevity, retirement and healthy aging1 (page 37).
• Aegon business operations have been climate neutral since 2016 (page 420) • Offer of socially responsible investment funds to customers (page 31)
• Exclusion in the Netherlands of investment in palm oil (page 36)
Partnerships for the goals Strengthen the means of implementation and revitalize the Global Partnership for Sustainable Development
• Signatories to UN Principles for both Responsible Investment and Sustainable Insurance (pages 19, 39, 434)
Note: in our analysis, we excluded three SDGs, where our contributions are not sufficiently material (primarily because of the nature of our business and the location of our operations).
(SDG6), and 'life below water' (SDG14). For more information on the SDGs, see sustainable-development-goals/
Alt-A mortgages relates to a type of US residential mortgage which are securitized home equity loans. Typical Alt-A borrower has a credit score high enough to obtain an: 'A' standing.
Amortized cost is the amount at which the financial asset or liability is measured at initial recognition minus principal repayments, plus or minus the cumulative amortization using the effective interest rate method of any difference between that initial amount and the maturity amount and minus any reduction (directly or through the use of an allowance account)
Assets held by long-term employee benefit funds are part of plan assets. These are assets (other than non-transferable financial instruments issued by the reporting entity) that:  Are held by an entity that is legally separate from the reporting entity and exists solely to pay or fund employee benefits; and  Are available to be used only to pay or fund employee benefits and are not available to the reporting entity's own creditors.
Authorized Control Level (ACL) is the level regulators are permitted to seize control of a company.
Company Action Level (CAL) is the regulatory intervention level at which a company has to submit a plan to its state regulators for the Aegon Americas segment. It is 200% of the Authorized
Control Level (ACL) – the level regulators are permitted to seize control of a company. It is a requirement and the most pertinent for measuring risk-based capital (RBC).
Currency exchange rate risk is a market risk, namely the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.
the amortized cost of a financial asset or liability and of allocating the interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or liability.
Goodwill is the amount of future economic benefits arising from assets that are not capable of being individually identified and separately recognized as an asset in a business combination.
Master netting agreement is an agreement providing for an entity that undertakes a number of financial instrument transactions with a single counterparty to make a single net
Minimum capital requirement is the absolute minimum level of capital an insurance company must hold in excess of its
Operational funding includes debt securities that are issued for the financing of dedicated pools of assets. These assets are either legally segregated or tracked as separate portfolios.
Recognition is the process of incorporating in the statement of financial position or income statement an item that meets the
recognition:  It is probable that any future economic benefit associated with the item will flow to or from the entity; and  The item has a cost or value that can be measured with reliability.
The insurer’s RBC solvency ratio is determined as its “total adjusted capital” divided by “authorized control level risk based capital. (ACL)” However, it is industry and rating agency convention to complete and communicate the RBC solvency ratio relative to the “Company Action Level Risk Based Capital”, which is twice the authorized control level.
Trust Pass-Through securities (TRUPS) are securities through which the holders participate in a trust. The assets of these trusts consist of debentures issued by an Aegon Group company.
Securities Litigation Reform Act of 1995. The following are words that identify such forward-looking statements: aim, believe, estimate, target, intend, may, expect, anticipate, predict, project, counting on, plan, continue, want, forecast, goal, should, would, is confident, will, and similar expressions as they relate to Aegon. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Aegon undertakes no obligation to publicly update or revise any forward-looking statements.
Aegon’s fixed income investment portfolios;  The effects of corporate bankruptcies and/or accounting restatements on the financial markets and the resulting decline in the value of equity and debt securities Aegon holds; and
Netherlands, the United Kingdom and emerging markets;  Changes in laws and regulations, particularly those affecting
Aegon’s operations’ ability to hire and retain key personnel, taxation of Aegon companies, the products Aegon sells, and the attractiveness of certain products to its consumers;  Regulatory changes relating to the pensions, investment, and insurance industries in the jurisdictions in which
Aegon operates;  Standard setting initiatives of supranational standard setting bodies such as the Financial Stability Board and the
Aegon’s products;  Changes in accounting regulations and policies or a change by Aegon in applying such regulations and policies, voluntarily or otherwise, which may affect Aegon’s reported results and shareholders’ equity;  Aegon’s projected results are highly sensitive to complex mathematical models of financial markets, mortality, longevity, and other dynamic systems subject to shocks and unpredictable volatility. Should assumptions to these models later prove incorrect, or should errors in those models escape the controls in place to detect them, future performance will vary from projected results;  The impact of acquisitions and divestitures, restructurings, product withdrawals and other unusual items, including
Aegon’s ability to integrate acquisitions and to obtain the anticipated results and synergies from acquisitions;  Catastrophic events, either manmade or by nature, could result in material losses and significantly interrupt
Aegon’s business;  Aegon’s failure to achieve anticipated levels of earnings or operational efficiencies as well as other cost saving and excess cash and leverage ratio management initiatives.
Aegon expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forwardlooking statements contained herein to reflect any change in Aegon’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.