This has led to considerable strategic, operational and financial changes across our company, enabling us to enhance our products and services to meet the evolving needs of our almost 29 million customers worldwide.
Fourth quarter  Transamerica announces it has settled a US class action suit challenging rate adjustments on universal life insurance policies.
Aegon can trace its roots back to the first half of the 19th century. Nearly 175 years later, we have businesses in more than 20 countries, serving 28.5 million customers worldwide, and with EUR 316 billion in assets under management.
(GDPR) and with new cyber security legislation in New York and
introduction in 2022). Changes in regulation can have a profound effect not only on the way we manage our business, but also on our profitability and the products and services we offer.
1 This figure relates to financial capital, but has been used as a proxy for social capital (creating a healthier environment).
Our business is also changing. We used to be essentially a manufacturer of financial products. Now, we are a provider of financial services. More of our business is fee-based. We are less reliant on income from financial market spreads. In some cases, our businesses also offer products from other providers.
If we can use technology to help our customers lead healthier lives, this benefits them and may reduce claims and costs for us as their insurer.
1 Stakeholders responding to the survey included: customers, employees and regulators in our three main markets (US, Netherlands and UK), representatives of Aegon’s European Works Council, financial advisors /brokers, bancassurance and joint venture partners, reinsurers, suppliers, financial analysts, institutional investors, peers, rating agencies, NGOs, and academics. Members of Aegon’s Management and Supervisory Boards also took part in the survey.
Degree of influence or control: Like other companies, we have a direct and immediate responsibility to protect customer data, and ensure our systems are safe and secure at all times.
1 Source: UN World Population Prospects, 2017 (life expectancy at age 65 was estimated at 13.47 years in 1950-1955 and at 20.91 years in 2020-2025).
we are in an industry where, traditionally, there is very little direct contact. More frequent interaction helps us improve customer service. We believe it will also strengthen trust in our brand, and flow through eventually into higher sales.
We have also been expanding our banking business. Aegon Bank already has over 600,000 customers. Knab, our online bank, has branched out from simple current accounts; it now offers a range of financial products, including mortgages, savings, insurance, business accounts and investments. Overall, banking now makes up around 17% of our underlying earnings from the Netherlands.
Having built a solid foundation for our business, our focus now is on sustainable growth in all senses of the word. Almost half the capital we currently generate goes back into our business.
Future Fit behaviors have been incorporated into performance appraisals, training and remuneration. They also form part of Aegon’s leadership development programs. In the Netherlands,
Underlying earnings before tax 2,074 2,140 (3%) During the year, we had expense savings across our businesses – and higher earnings from Spain & Portugal, the Netherlands and UK. This was offset, however, by the effect of the sale of UMG, our Dutch distribution business, as well as worse-than-expected claims experience and lower earnings from retirement plans in the US.
2 For definition of NPS, see page 423. 3 Our 2017 figure for total customers has been restated. For more details, please see page 418.
In 2018, we paid out EUR 2.1 billion in salaries and benefits for our employees. Of this total, salaries accounted for almost 60%. The remainder comprises mainly benefits and other personnel costs.
Payments to business partners Distribution We pay commissions to brokers and other financial intermediaries in return for selling Aegon products and services. In 2018, these commissions totaled EUR 2.4 billion. Over the past five years, commissions have declined by almost 26%. This is partly a result of lower sales, but also the introduction of new, digital technologies (which have made it easier to sell directly to customers) and recent regulations in the Netherlands and the UK (which restrict payment of commissions to intermediaries 1). Though the nature of our relationship has changed, intermediaries remain a valuable sales channel.
Aegon’s tax function maintains an adequate staff of qualified and trained tax professionals to provide timely and high-quality tax support to our commercial decision-makers. In this regard, proper governance and procedures are in place to ensure that: 1. the tax team understands and is engaged in the tax effects of day-to-day business operations and involved in all significant business developments, investments and transactions.
Composition of the Executive Board Aegon’s Executive Board consists of Alexander R. Wynaendts, who is Chief Executive Officer (CEO) and Chairman of the Executive Board, and Matthew J. Rider, who is Chief
of the issued and outstanding capital, as at December 31, 2018.
Board in January 2016. Ms. van Hövell-Patrizi is a member of the Supervisory Board of LeasePlan (not listed) since 2018.
Board member position at the Nederlandse Investeringsinstelling, and is Vice Chairman of the Supervisory Board of La Banque
Ellman Stoddard Capital Partners. Mr. Ellman was appointed to Aegon’s Supervisory Board in 2017, and his current term ends in 2021. He is a member of the Supervisory Board Audit
Board meetings Attendance In 2018, the Supervisory Board had seven regular (face-to-face)
Systematically Important Insurer (G-SII) and the settlement with the US Securities and Exchange Commission (SEC) with regards to the operation and implementation of asset management quantitative models by Aegon’s US asset management operations, and related disclosures. The Board furthermore discussed the settlement that resolved litigation challenging certain monthly deduction rate adjustments on universal life insurance policies in the United States. An overview of the topics discussed in the field of Risk Management can be found in the Audit Committee and Risk Committee sections below.
Compliance, Investor Relations, Tax, Actuarial and Business departments regularly attended Audit Committee meetings.
Staff'. Furthermore, where exceptions to the policies are requested to reflect local practices or regulations, Risk
Based on the results of the annual competitiveness review and discussions with the Executive Board members regarding their remuneration level and structure, the Remuneration
Committee prepares a recommendation for the allocation of a variable compensation award to each Executive Board member. This recommendation is based on the results on each of the applicable performance indicators, related threshold, target and maximum levels and another ex-ante risk assessment by the Company’s Risk Management team. This risk assessment looks into whether there are reasons for a downward adjustment of the intended variable compensation award. For this purpose, quantitative and qualitative measures at group, regional unit and individual level are taken into account, such as:  Breaches of laws and regulations;  Breaches of internal risk policies (including compliance);  Significant deficiencies or material weaknesses relating to the
This Supervisory Board decision includes validating that, when taken together, the results of the performance indicators represent a fair reflection of the overall performance of the Executive Board member over the performance year.
Global Health & Safety Statement • Commits Aegon to upholding high health and safety standards in its offices • Aim is to limit work-related injuries and illnesses (including stress) to an absolute minimum
Aegon assesses suppliers against these standards, and requires leading suppliers to sign a Supplier Sustainability Declaration.
Pillar 2 Under Pillar 2, insurance and reinsurance companies are required to set up and maintain an adequate and effective system of governance, which includes an appropriate internal organization (such as policies and procedures), a risk governance system and an effective assessment of the risk and solvency position of the Company (including a prospective assessment of risks), through the Own Risk and Solvency Assessment (ORSA)
Globally systemically important insurer (G-SII) On November 3, 2015, Aegon was first designated by the Financial Stability Board (FSB) as a Global Systemically
US – EU Covered Agreement On January 13, 2017, the European Commission and the US Department of the Treasury announced the signing of the US-EU Covered Agreement on insurance and reinsurance measures. The Covered Agreement covers three areas of prudential insurance oversight: reinsurance, group supervision and exchange of information between supervisors. The impact of this agreement (or any changes made to the regulatory frameworks in the US or the EU as a result of this agreement)
consultations on the integration of sustainability risks and factors in the Solvency and the Insurance Distribution Directive. During 2019 more consultations on sustainability are expected.
was approved on December 14, 2015, by the PRA as part of the
position of the activities of Aegon in the UK on December 31, 2018, is estimated to be 184% (2017: 176%). This increase mainly reflects the positive expense assumption update due to the improved price agreement with Atos, and the positive impact of management actions, which was dominated by the replacements of gilts held in the shareholder fund with a combination of interest and inflation swaps. Other management actions include the restructure of existing BlackRock and Baillie
Improving risk-return profile Aegon continues to take measures to improve its risk-return profile. These measures include de-emphasizing the selling of various spread based products and the strategic growth in fee-based businesses. In 2016, Aegon divested its annuity business in the UK, and reinvested part of the proceeds for the acquisition of Cofunds and BlackRock's DC business in the UK. In 2017, Aegon continued its commitment to optimize its portfolio by divesting UMG in the Netherlands and completing the sale of the majority of its US run-off businesses. In 2018,
G-SII designation and International Capital Standards For more information about Aegon’s G-SII designation, the impact thereof and the status of development of the International
Aegon enters into reinsurance agreements for risk and capital management purposes with several affiliated captive insurance companies (captives). All captives are fully consolidated for IFRS
Funding and back-up facilities The majority of Aegon’s financial leverage is issued by Aegon N.V., the parent company. A limited number of other
facility of USD 2.6 billion. In 2018, the company refinanced its syndicated revolving credit facility. The new facility matures in 2023. The LOC facility matures in 2021. In addition, Aegon also maintains various shorter-dated bilateral backup liquidity facilities, and committed and uncommitted LOC facilities.
and at the operating unit level. Aegon maintains a liquidity policy that requires all business units to project and assess their sources and uses of liquidity over a two-year period under normal and severe business and market scenarios. This policy ensures that liquidity is measured and managed consistently across the Company, and that liquidity stress management plans are in place.
Solvency II own funds. This is achieved by using options and equity and interest rate swaps to guard against fluctuations in best estimate liabilities. This year a new Solvency II unit matching program was introduced to reduce residual basis risk associated with unit-linked liabilities. Programs are also in place to match assets with the liabilities of the remaining annuity book and the staff pension scheme.
Spain & Portugal Aegon Spain has a 'one Aegon' reinsurance management policy.
Conduct Risk Both industry-wide and within Aegon, cultural and behavioral elements of risks increasingly play a role within overall risk frameworks. Relevant in this context are, among others, the European Insurance Distribution Directive (IDD) and the General Data Protection Regulation (GDPR). Conduct risk refers to the risks inherent in behaviors, business and staff integrity and business culture, including, but not limited to, meeting the standards of Aegon’s Market Conduct Principles.
Aegon has a comprehensive range of company-wide risk policies that detail specific operating guidelines and limits. These policies include legal, regulatory and internally set requirements, and are designed to keep overall risk-specific exposures to a manageable level. Any breach of policy limits or warning levels triggers remedial action or heightened monitoring. Further risk policies may be developed at a local level to cover situations specific to particular regions or business units.
It is the responsibility of the Executive Board and the Group's Chief Risk Officer (CRO) to inform the Supervisory
and Solvency II numbers. The objective is to provide assurance regarding the reliability, accuracy, completeness, timeliness and quality of internal and external (regulatory) reporting, the safeguarding of assets, and compliance with internal and external requirements. A key element of Aegon’s internal control system is to facilitate action planning and embed continuous improvement regarding the internal control environment throughout the organization.
framework 434  EU directive on Non-Financial Information 434  UN Principles for Sustainable Insurance (PSI)
IFRS-EU measures provides meaningful supplemental information about the underlying operating results of Aegon’s businesses, including insight into the financial measures that senior management uses in managing the businesses.
Number of employees, including agent employees 8,824 3,548 3,135 2,318 519 9,520 6,344 1,464 390 26,543
Net income Net income amounted to EUR 744 million in 2018, as underlying earnings before tax of EUR 2,074 million were partly offset by fair value losses, below the average nominal tax rate, other charges, losses on investments, net impairements, losses from run-off businesses and income taxes. The effective tax rate amounted to 10% as a result of one-time tax benefits of declining US and Dutch corporate income tax rates next to the regular tax exempt income items and tax credits.
Impairment charges Net impairments of EUR 19 million in 2018 primarily related to an impairment of corporate bonds caused by a bankruptcy filing.
Capital management During 2018, shareholders’ equity decreased by EUR 1.1 billion to EUR 19.5 billion, as net income and strengthening of the US Dollar were more than offset by dividends paid to shareholders, a reduction in revaluation reserves as a result of widening credit spreads and higher interest rates in the United
in the United States (EUR 85 million), and restructuring and integration charges.
Kingdom, which more than offset the increase in sales in Asia driven by the continued success of the whole life critical illness product. New premium production for accident & health and general insurance decreased by 7% compared with 2016 to EUR 885 million in 2017, mainly as product exits and lower supplemental health sales in the United States more than offset increased general insurance production supported by a portfolio acquisition in Hungary.
Accident and health insurance premiums 1,856 2,388 (22) 1,571 2,115 (26)
USD 315 million in 2017. This was the result of lower fee income from lower asset balances, a lower investment margin, unfavorable mortality, and higher operating expenses as a result of changes in expense allocations between product lines and investment spend to support growth and improve the Workplace experience.
America. Net outflows amounted to USD 17.4 billion, mainly caused by Retirement Plans due to a small number of large contract discontinuances and higher participant withdrawals.
US tax reform were partly offset by other charges which mainly relate to model updates and assumption changes. Underlying earnings before tax in 2017 strongly increased compared with 2016 to USD 1.6 billion. Results on fair value items amounted to a gain of USD 192 million in 2017, which was primarily related to changes to hedging programs to a 100%
Commissions and expenses Commissions and expenses decreased by 10% compared with 2016 to USD 4.1 billion in 2017 mainly driven by lower sales of life and annuity products. Operating expenses decreased by 2% compared with 2016 to USD 1.8 billion in 2017 as a result of expense savings, which were partly offset by investments in business transformation and project expenses.
of which operating expenses 1,496 1,610 (7) 1 Aegon has changed the measurement of underlying earnings before tax for its real estate investments portfolio held by Aegon the Netherlands.
Commissions and expenses for the Netherlands Commissions and expenses decreased by 13% compared with 2017 to EUR 812 million in 2018. Operating expenses were down by 14% compared with 2017 to EUR 703 million in 2018, reflecting the sale of UMG in the fourth quarter of 2017 and expense savings in the insurance businesses. This was partly offset by investments in new digital propositions.
Commissions and expenses Commissions and expenses increased by 4% compared with 2016 to EUR 2,141 million in 2017. Operating expenses increased by 11% compared with 2016 and amounted to EUR 1,610 million in 2017.
USD 21 million in 2017 compared with USD 39 million in 2016 mainly a result of favorable persistency and lower new business related expenses. Following the strong results in
Netherlands.  Americas underlying earnings before tax increased to EUR 62 million in 2018, compared with EUR 59 million in 2017, mainly driven by higher management and origination fees, in addition to expense savings in 2018 compared with 2017.
Earnings per share (EUR per share) 19 Basic earnings per common share 0.31 1.08 0.22
Items that will not be reclassified to profit or loss: Changes in revaluation reserve real estate held for own use (32) 8 8
(Gains)/losses transferred to income statement on disposal and impairment of available-for-
Changes in cash flow hedging reserve - - 5 - - - 5 - 5
Changes in cash flow hedging reserve - - (853) - - - (853) - (853)
Amendments to IAS 1 and IAS 8: Definition of Material January 1, 2020 Not yet No Low
Financial assets at fair value Fair value at the end of the reporting period Change in fair value during the reporting period
Debt securities – Carried at fair value 25,637 9,224 17,057 20,330 1,480 1,159 1,395 - 76,283
Money market and other short-term investments – Carried at fair value - -
The liability for the insurance contracts for account of policyholders is measured at the policyholder account balance. Contracts with unit-denominated payments are measured at current unit values, which reflect the fair values of the assets of the fund. If applicable, the liability representing the nominal value of the policyholder unit account is amortized over the term of the contract so that interest on actuarial funding is at an expected rate of return.
the remaining loss, unless shadow loss recognition has taken place. In the Netherlands, in situations where market interest rates for the valuation of debt securities leads to a change in the revaluation reserve, and where the result of using the same assumptions for the liabilities could lead to a deficiency in the liability adequacy test that should be recognized in the income statement, shadow loss recognition is applied. Shadow loss recognition is applied to the extent that the deficiency of the insurance liabilities relates to the revaluation of debt securities as a result of movements in interest rates, the addition to the insurance liabilities is then offset against the revaluation reserve. If in subsequent periods such a deficiency of the insurance liability is no longer applicable, shadow loss recognition is reversed via the revaluation reserve.
Some unitized investment contracts provide policyholders with the option to switch between funds with and without discretionary participation features. The entire contract is accounted for as an investment contract with discretionary participation features if there is evidence of actual switching resulting in discretionary participation benefits that are a significant part of the total contractual benefits.
Removing future mortality improvement would result in a GPV decrease of approximately EUR 85 million.
Credit risk As premiums and deposits are received, these funds are invested to pay for future policyholder obligations. For general account products, Aegon typically bears the risk for investment performance which is equal to the return of principal and interest. Aegon
Debt securities – carried at amortized cost - - - - - - - - - -
At December 31, 2018 there was no violation of the Credit Name Limit Policy at Group level (December 31, 2017: nil).
Past due and/or impaired assets - 20 - - 416 1,207 1,624 1 Includes investments of Holding and other activities.
Aegon’s investments in unconsolidated structured entities such as RMBSs, CMBSs and ABSs and investment funds are presented in the line item 'Investments' of the statement of financial position. Aegon’s interests in these unconsolidated structured entities can be characterized as basic interests, Aegon does not have loans, derivatives, guarantees or other interests related to these investments.
Individual issuers rated below investment grade in any sector which have unrealized loss positions greater than EUR 25 million are disclosed separately. Furthermore, quality ratings of investment portfolios are based on a composite of the main rating agencies
Each of these key assumptions varies greatly based on the significantly diverse characteristics of the current collateral pool for each security. Loan-to- value, loan size, and borrower credit history are some of the key characteristics used to determine the level of assumption that is utilized. Defaults were estimated by identifying the loans that are in various delinquency buckets and defaulting a certain percentage of them over the near-term and long-term. Assumed defaults on delinquent loans are dependent on the specific security's collateral attributes and historical performance.
CMBS are securitizations of underlying pools of mortgages on commercial real estate. The underlying mortgages have varying risk characteristics and are pooled together and sold in different rated tranches. The company's CMBS include conduit, large loan, single borrower, commercial real estate collateralized debt obligations (CRE CDOs), collateralized debt obligations (CDOs), government agency, and franchise loan receivable trusts.
The Banking sub-sector in Aegon’s portfolio is relatively large, diverse, and of high quality. Aegon Americas and Aegon the Netherlands hold EUR 6,293 million (December 31, 2017: EUR 6,669 million) of AFS bonds issued by banks, of which EUR 6,069 million
Healthcare REITs, Office REITS, Other REITs, and Retail REITs. The majority of the gross unrealized loss relates to Other REITs and
The Capital Goods sub-sector encompasses various industries including aerospace/defense, building materials, construction machinery, diversified manufacturing, environmental, and packaging. The majority of the gross unrealized loss relates to building materials and diversified manufacturing. Building material credit fundamentals were solid for most of the year, benefiting from favorable endmarket demand. However, while infrastructure markets are improving, softness has emerged in residential housing as interest rates have risen, resulting in concerns over affordability, buyers delaying decisions, and a less robust near term outlook. Within Diversified
A small group of issuers have been negatively impacted by merger and acquisition financing, poor integration of recent acquisitions, and newly announced debt financed stock repurchase programs. On a fundamental basis, majority of technology subsectors performed well; however the memory industry has experienced price erosion due to high inventory levels. Aegon evaluated the near-term prospects of the issuers in relation to the severity and duration of the unrealized loss and does not consider those investments impaired as of
Impairment charges and reversals on non-financial assets and receivables 46 4 43
Impairment charges/(reversals) on non-financial assets and receivables increased to EUR 46 million in 2018 mainly due to updated valuations on various real estate properties in the Americas and impairments to software in the Netherlands.
In 2018, Aegon completed the sale of Aegon Ireland plc., also referred to as VA Europe. As a consequence, the related assets and liabilities are no longer classified as assets and liabilities held for sale at year-end 2018. For more information related to the sale transaction, refer to note 51 Business combinations.
In addition, Aegon also makes use of cross currency swaps to convert variable or fixed foreign currency cash flows into fixed cash flows in local currencies. The cash flows from these hedging instruments are expected to occur over the next 18 years. These agreements involve the exchange of the underlying principal amounts.
< 1 year 1 – 5 years 5 – 10 years > 10 years 2017 Total
is the most material part of the Aegon UK value in use calculation, and it is determined using SE plc’s Solvency II own funds value with adjustments for contract boundaries, risk margin and SE plc’s share of the defined benefit pension scheme liability. An allowance has also been made for the present value of the next 3 years profits, from expected new business. This is considered a key assumption which if it does not arise would reduce the value in use, however a headroom would still remain.
Transactions in 2016: Issuance of common shares with a par value of EUR 0.12 9,122
Share buyback program (interim dividend 2016) 30,765 1 Dividend distribution paid from treasury shares (note 32.3) 2 Dividend distribution paid from treasury shares (note 32.3) and issuance of common shares performed in the year.
Gross premium and deposits – existing and new business 6,293 6,498
1 Linked to the sale of Aegon UK’s annuity portfolio, refer to note 51 Business combinations.
Operational funding During 2018, the operational funding decreased by EUR 1.1 billion mainly due to the redemption of ‘SAECURE 13’ of EUR 0.7 billion, paydown of FHLB advances of EUR 0.7 billion and a decrease in other mortgage funding of EUR 0.5 billion. This was partly offset by a transaction under the Dutch SAECURE program ('SAECURE 16') to sell Class A mortgage backed securities (RMBS). ‘SAECURE
USA in 2018 or 2017. However, with the Aegon N.V. Management Board approval of a proposal from Transamerica Corporation,
100 basis points decrease in discount rate 733 605 100 basis points increase in salary increase rate 18 4 100 basis points decrease in salary increase rate (18) (4)
The investment strategy for the scheme is determined by the trustees in consultation with Aegon UK. Currently 30% of assets are invested in growth assets (i.e. primarily equities) and 70% are liability driven investments where the investments are a portfolio of fixed interest and inflation-linked bonds and related derivatives, selected to broadly match the interest rate and inflation profile of liabilities.
Deferred corporate income tax liabilities have not been recognized for withholding tax and other taxes that would be payable on the unremitted earnings of certain subsidiaries. The unremitted earnings totaled gross EUR 1,770 million; tax EUR 361 million
Tr an sf er s to d is po sa l g ro up s
Trust pass-through securities – held at amortized cost 133 - 128 - 128
USD 100 million (period 2019 – 2022) as well as administrative, IT and finance service fees which are contingent on TCS meeting specified milestones in the underlying agreement with Transamerica. The agreement also contains a termination clause in which case
Company, to the extent that the assets in the captive (TRRI) are not sufficient to cover reinsurance obligations. As of December 31, 2018, this amounted to EUR 1,892 million (2017 EUR: 1,793 million).
Sprintplan. Allegations include, among other things, a lack of a proper license of the brokers involved. In October 2017, the district court of The Hague ruled in favor of Aegon that the Sprintplan liability had been conclusively determined in earlier proceedings and there were no grounds to hold further collective proceedings. The plaintiff appealed. The case is now pending at the court of appeal 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. At this time, Aegon is unable to estimate the range or potential maximum liability. There can be no assurances that this matter will not ultimately result in a material adverse effect on Aegon’s business, results of operations and financial position.
Refer to note 27 Investments in associates for further details on these investments.
Remuneration of members of the Management Board The Management Board, which assists the Executive Board in pursuing Aegon’s strategic goals, is formed by members of the Executive
Jan J. Nooitgedagt 1 The number of shares is based on a volume weighted average price of EUR 3.126. After vesting a 3 year holding period applies to shares vested.
Interests in Aegon N.V. held by active members of the Executive Board Shares held in Aegon at December 31, 2018 by Mr. Wynaendts amount to 494,779 (2017: 448,601) and by Mr. Rider to 20,462
The repayment periods of borrowings vary from within one year up to a maximum of 21 years. The interest rates vary from 1.000%
Independent auditor's report To: the Annual General Meeting of Shareholders’ and Supervisory Board of Aegon N.V.
During 2018, Aegon continued a multi-year review of their actuarial models with focus on those considered medium and high risk.
The Executive Board is responsible for the preparation of the other information, including the directors’ report and the other information in accordance with Part 9 of Book 2 of the Dutch Civil Code.
Responsibilities for the financial statements and the audit Responsibilities of the Executive Board and the Supervisory Board for the financial statements The Executive Board is responsible for: �� the preparation and fair presentation of the financial statements in accordance with IFRS-EU and with Part 9 of Book 2 of the Dutch
Overview of Americas Aegon Americas operates under the Transamerica brand in the United States, and has operations in Brazil and Mexico and a small operation in Canada.
lines, described in greater detail below, represent groups of products and services that Aegon USA offers through a number of distribution methods and sales channels. Products are also offered and distributed through one or more of Aegon USA's licensed insurance or brokerage subsidiary companies.
A number of these products provide policyholders with lump sum or specified payments if such policyholders are hospitalized, injured, or diagnosed with a critical illness. Others pay benefits for specific medical expenses and treatments, or cover deductibles, co-payments and co-insurance amounts not covered by other health insurance. Medical stop-loss insurance offered to employers to protect against catastrophic losses under self-funded health plans was discontinued during 2018 and is in a wind-down phase.
Aegon USA's primary competitors in the variable annuity market are AIG, AXA Equitable, Jackson National, Lincoln National, Nationwide and Prudential Financial.
Organizational structure Aegon the Netherlands operates through a number of brands, including Knab, TKP Pension, Optas and Robidus, and is itself one of the most widely recognized brands in the Dutch financial services sector.
Services Business Mortgage loans At present, Aegon the Netherlands mostly offers 'annuity mortgages'. Before 2013, Aegon the Netherlands also offered interest-only, unit-linked and savings mortgage loans, and is continuing to do so for existing mortgage loans that are being renegotiated. Mortgage loans are partly funded externally. Besides residential mortgage-backed securities in Saecure – Aegon’s Dutch residential mortgagebacked securities program and private placements – the Aegon Mortgage fund is the main source of external funding. For this business,
Aegon originates the mortgage loans fully for account of third parties and remains the service provider for these mortgage loans.
Competition Aegon the Netherlands has strong competition in all markets from insurers, banks, investment companies and pension funds. Its main competitors are Achmea, ASR, NN Group and Vivat.
In the mortgage loans market, Aegon the Netherlands held a market share of approximately 9% based on new sales in 2017 (and 7% in 2016), making it the fourth largest mortgage loan provider in the market. Rabobank, ING Bank and ABN AMRO are the largest mortgage loan providers in the market, and competition is increasing from foreign competitors and capital from pension funds.
An insurance company is neither permitted to conduct both life insurance and non-life insurance business within a single legal entity
Overview of business Lines Aegon UK was reorganized in 2016 to 'Digital Solutions' and 'Existing Business', which have separate leadership teams.
The UK vote to leave the European Union (EU) on June 23, 2016, has implications for the UK. Much financial regulation currently applicable in the UK derives from EU legislation. This regulation will remain in force until any changes are made, which will be a matter for the UK government and the UK Parliament. Aegon UK must therefore continue to comply with UK law, including those that derive from EU law and continue with implementation plans for legislation that is anticipated to come into effect. The FCA has acknowledged that the longer term impacts of the decision to leave the EU on the overall regulatory framework for the UK will depend, in part, on the relationship that the UK seeks with the EU in the future.
Every life insurance company licensed by and/or falling under the supervision of the PRA must file audited regulatory reports on at least an annual basis. These reports, primarily designed to enable the PRA to monitor the solvency of the insurance company, include a (consolidated) balance sheet, a (consolidated) income statement, a breakdown of the Solvency Capital Requirements, extensive actuarial information, and detailed information regarding the investments of the insurance company. The PRA's regulatory reporting is based on a single entity focus, and is designed to highlight risk assessment and risk management.
Non-life Aegon Hungary offers non-life cover (mainly household and car insurance, in addition to some wealth and liability industrial risk and travel insurance). Aegon is the leading insurance company in the Hungarian household market. In recent years, margins on non-life insurance in Hungary have been attractive. Moreover, household insurance provides considerable opportunities for the cross-selling of life insurance.
Santander S.A. is the largest financial institution in Spain, with over 4,600 branches nationwide.
Overview – Spain & Portugal  Spain & Portugal  Spain & Portugal  Spain & Portugal
Aegon Spain and Liberbank Liberbank, S.A. has a presence nationwide, with a special focus on retail markets in a number of Spanish regions (Asturias, Cantabria,
India: Aegon Life Indian life insurance companies are regulated by the Insurance Regulatory and Development Authority of India (IRDAI).
In addition, the FSA also updated its guideline to enhance risk management by risk-based approach in March 2018, particularly to address issues around anti-money laundering and terrorism financing.
The insurance industry in Singapore is regulated by the Monetary Authority of Singapore (MAS). The MAS is an integrated regulator that oversees all banks, insurers, capital market intermediaries and financial advisors in Singapore.
Aegon Asset Management's main operating entities are Aegon USA Investment Management LLC, Aegon USA Realty Advisors LLC,
European Executive Committee. The-day-to-day management of these two entities is delegated to the European Executive Committee.
Management in the United States do not fall under the responsibility of Aegon Asset Management Holding B.V., as these entities are subsidiaries of Transamerica Corporation.
Rapidly rising interest rates may adversely affect Aegon’s profitability and available liquidity
Furthermore, to parts of the Aegon Group, in particular Aegon Bank N.V., the framework of the EU Directive on the recovery and resolution of credit institutions and investments firms (the "Bank Recovery and Resolution Directive") is applicable. The Bank
Aegon may experience difficulties in distributing and marketing products through its current and future distribution channels.
Climate change is a long-term risk associated with high uncertainty regarding timing, scope and severity of potential impacts. The risks for insurers can be grouped into physical risks and transition risks. Physical risks relate to losses from climate trends (i.e. changing weather patterns and sea level rise) and climate events (i.e. extreme weather and natural disasters). These physical risks impact property & casualty (P&C) insurance, but also life insurance, for instance through higher than expected mortality rates. Losses can also follow from credit risk and collateral linked to the mortgage portfolio. Aegon is exposed to mortality risk and mortgage underwriting risks and has limited exposure to P&C risk, including catastrophic risk. Beyond insured losses from physical climate damages, climate change can increase uninsured damages and losses and may have disrupting and cascading effects on the wider economy and across the financial system. The second category of risks is associated with the transition to a low-carbon economy. These transition risks can affect the value of assets and impact the investments portfolios of insurers. Furthermore, it cannot be ruled out that Aegon itself is unable to adjust to environmental and sustainability goals. The transition risks are determined by largely uncertain factors such as policy and regulatory changes, political, social and market dynamics and technological innovations. Linked to both the physical and the transition risks, there could be litigation and reputational risks following from not fully considering or responding to the impacts of climate change, or not providing appropriate disclosure of current and future risks. The risks can relate both to Aegon and the companies in which it invests.
The information security risk that Aegon faces includes the risk of malicious outside forces using public networks and other methods, including social engineering and the exploitation of targeted offline processes, to attack Aegon’s systems and information. It also includes inside threats, both malicious and accidental. For example, human error and lack of sufficiently automated processing can result in improper information exposure or use. Aegon also faces risk in this area due to its reliance in many cases on third-party systems, all of which may face cyber and information security risks of their own. Third-party administrators or distribution partners used by Aegon or its subsidiaries may not adequately secure their own information systems and networks, or may not adequately keep pace with the dynamic changes in this area. Potential bad actors that target Aegon and its applicable third parties may include, but are not limited to, criminal organizations, foreign government bodies, political factions, and others.
Large, global financial institutions such as Aegon have been, and will continue to be subject to information security attacks for the foreseeable future. The nature of these attacks will also continue to be unpredictable, and in many cases may arise from circumstances that are beyond Aegon’s control. If Aegon fails to adequately invest in defensive infrastructure, technology and processes or to effectively execute against its information security strategy, it may suffer material adverse consequences.
In 2016, Vereniging Aegon entered into a three year term and revolving facilities agreement with a consortium of banks. In 2018, this agreement was extended to 2021. Under this agreement, Aegon’s common shares in the possession of Vereniging Aegon are pledged to the consortium of banks. If Vereniging Aegon were to default under the facilities agreement in force at that time, the lenders may dispose of Aegon’s common shares held by them as collateral in order to satisfy amounts outstanding.
IPP #1 and #2 are lifelong annuity plans which start at the retirement age of 65 (January 2023). The annual pension benefits as of
Differences between common shares and common shares B  The common shares are listed; the common shares B are not listed;  The financial rights attaching to a common share B are one-fortieth (1/40th) of the financial rights attaching to a common share; and  A repayment on common shares B needs approval of the holders of common shares B.  A transfer of common shares B requires approval of the Supervisory Board of Aegon N.V.
Furthermore, a similar refund of Netherlands dividend withholding tax may be available to a holder of Aegon common shares resident in another country, under the additional conditions that (i) the Aegon common shares are considered portfolio investments for purposes of article 63 (taking into account article 64) of the Treaty on the functioning of the European Union and (ii) the Netherlands can exchange information with this other country in line with the international standards for the exchange of information.
Net deposits (on and off balance sheet) 3,891 (8,547) (4,656) (3,706) (13,383) (17,088)
Ratio of median to CEO salary3 42:1 42:1 unchanged 42:1 102-38, 102-39
Returns to investors EUR 861 million EUR 721 million 19.4% EUR 774 million
Materiality principle Aegon uses materiality to determine the scope and content of its integrated report. For non-financial data, the report contains only material information; this is information relating to topics the Company believes have, or will have, a significant long-term impact on its profitability, operations or reputation.
Operating environment • Key economic, social, environmental and governance trends (Our operating environment – page 17) • Definition of material topics /overview of materiality process (Our material topics – page 17)
1.6 Balance The reported information shall reflect positive and negative aspects of the reporting organization’s performance to enable a reasoned assessment of overall performance.
102-8 Information of employees and other workers Page 9 (Where our employees work) Page 14 (Our value chain) Page 32 (Employees) Page 66 (Non-financial policies, procedures and outcomes)
102-34 Nature and total number of critical concerns Page 90 (Risk management)
102-53 Contact point for questions regarding the report Page 446 (Contact)
The management approach and its components 103-2 Reputation & trust Page 21 (Financial security and well-being) Page 21 (Secure retirement and healthy aging) Page 22 (Clean energy and sustainable real estate)
We work closely on ESG issues with governments, regulators and other stakeholders (see Stakeholder engagement – page 16; Secure retirement and healthy aging – page 21; Wider community – page 36; Regulation and supervision – page 70).
We publish details our progress each; our latest progress report is included in our 2018 integrated Annual Report (page 434).
For our business, we have identified the following targets as strategic:  SDG1: No poverty (target 1.2)  SDG3: Good health and well-being (target 3.4)  SDG7: Affordable and clean energy (targets 7.2, 7.3 and 7a)  SDG8: Decent work and economic growth (target 8.10)  SDG13: Climate action (target 13.2)
Contribution to target 3.4 • Supplemental health insurance for customers on low incomes (page 31) • Cover for customers facing chronic illnesses, including diabetes and cancer (page 31) • Investment in care homes for the elderly in UK and Netherlands (page 37) • Support for research into chronic illnesses, including cancer, heart disease and
1 In 2018, Aegon's Center for Longevity and Retirement also published a report into retirement for the LGBT community: Retirement preparations amid social progress.
Claims settlement expenses are costs incurred in settling a claim. These costs include internal administration and payout costs, but also such items as attorney´s fees and investigation expenses.
Deferred tax assets are amounts of income taxes recoverable in future periods in respect of deductible temporary differences; the carry forward of unused tax losses; and the carry forward of unused tax credits.
in the event of default on, or termination of, any contract.