Report of the Supervisory Board 108 Members of the Supervisory Board 1 13 Remuneration Policy and Report 115 Corporate Governance 122 Differences Dutch and US company laws 127 Code of ethics 127 Controls and procedures 128
The amount AEGON repaid totaled EUR 4.1 billion. Of this amount, EUR 3 billion covered the repurchase of the original issue of convertible core capital securities, while an additional
The spread of the crisis to Italy occurred more or less in line with a weakening of the euro versus the US dollar. Over the first four months of 2011, the euro strengthened against the US dollar from 1.33 to 1.49, after which it weakened to 1.30 at year-end.
Customers are increasingly using the Internet and social media to locate and purchase financial services. In some countries, this has led to the emergence of new competitors using online distribution models, or non-traditional suppliers such as supermarkets and retailers. Established providers are under increasing pressure to reduce costs and adapt their systems of distribution.
Selected consolidated income statement information In million EUR (except per share amount) 2011 2010 2009 2008 2007
for the year 2010. Applying this rate to the weighted average paid-in capital of our preferred shares during 2010, the total amount of annual distributions we made in 2011 on our preferred shares for the year 2010 was EUR 59 million.
Bank’s fixed interest percentage for basic refinancing transactions plus 1.75%, as determined on NYSE Euronext
Number of employees, including agent-employees 12,547 4,839 3,203 8,354 327 29,270 (3,982) 25,288
EUR 446 million and were the result of a decision to replace equities by fixed income securities in the Netherlands, the divestment of the life reinsurance activities in the Americas in addition to normal trading in the investment portfolio.
These benefits were partly offset by charges for non recognition and impairment of deferred tax assets (EUR 59 million) in the United Kingdom.
Registration through the sale of 173,604,912 new common shares of AEGON N.V. with a nominal value of EUR 0.12.
AEGON’s business in the Americas performed well during 2011. Consistent with AEGON’s strategy, earnings from fee‑based businesses grew compared with the previous year. During the year, AEGON divested its life reinsurance activities as the company sharpened its focus on its core businesses. AEGON continued to pursue further efficiencies by building scale and achieving scalability in its businesses to capture the full benefits of organizational integration, a process that started in 2009. The company has also adapted and revised products to better respond to ever changing market conditions.
over the next five years, followed by a return of 6% thereafter.
USD 666 million. Increased earnings from variable annuities of USD 358 million and retail mutual funds of USD 22 million in 2011, were offset by lower earnings from fixed annuities of
USD 846 million, primarily the result of improved sales in the employer benefits and affinity marketing businesses.
AEGON’s chosen markets and key growth drivers, the company’s pension businesses experienced a year with more than USD 8 billion of net deposits for 2010. Total net deposits, excluding the run-off businesses, declined to USD 1.6 billion during the year, mainly due to the decision to de-emphasize sales of fixed annuities and stable value solutions outflows.
L&P offers a comprehensive portfolio of products tailored to meet the diverse needs of its key stakeholders: distributors, business clients, families and individuals.
Retirement Division administers and distributes these products through a variety of channels: including wirehouse firms, banks, regional broker dealers, independent financial planners and direct distribution.
Besides the minimum interest rate guarantee, certain fixed deferred annuity products also offer a bailout provision.
AEGON USA covers a range of different pension plans, including: �� 403 (b)
These restrictions adversely impact AEGON USA company telemarketing efforts, and new proposals, if enacted, will likely directly impact AEGON USA company direct mail efforts.
Some of the AEGON USA companies are registered as brokerdealers with the SEC under the Securities Exchange Act of 1934, as amended (the Securities Exchange Act) and are regulated by the FINRA. A number of AEGON USA companies are also registered as investment advisors under the
Dodd-Frank Act), enacted in 2010, reforms the regulatory structure of the financial services industry in the United States, including providing for additional oversight of “systemically significant” companies. Provisions of Dodd-Frank Act require the SEC to study the effectiveness of the legal and regulatory standards of care of broker-dealers, investment advisers and persons associated with these firms who are providing personalized investment advice. The study was completed in
companies modified business practices in response to those inquiries or findings. Certain AEGON USA companies have paid or been informed that the regulators may seek restitution, fines or other monetary penalties or changes in the way that business is conducted. The impact of any such fines or other monetary penalties is not expected to have a material impact on AEGON USA’s financial position, net income or cash flow.
AEGON USA companies administer and provide both asset management services and products used to fund defined contribution plans, individual retirement accounts, 529 plans and other savings vehicles. Changes to defined benefit plans by sponsors in reaction to the financial economic environment and the enactment of funding relief provisions may impact the services AEGON USA companies provide to these plans.
Transamerica Life Canada (TLC) is organized and regulated pursuant to the federal Insurance Companies Act (Canada).
The AEGON USA companies manage their asset liability matching through the work of several committees. These committees review strategies, define risk measures, define and review asset liability management studies, examine riskhedging techniques, including the use of derivatives, and analyze the potential use of new asset classes. Cash flow testing analysis is performed using computer simulations, which model assets and liabilities under stochastically projected interest rate scenarios and commonly used stresstest interest rate scenarios. Based on the results of these computer simulations, the investment portfolio is structured to maintain a desired investment spread between the yield on the portfolio assets and the rate credited on the policy liabilities. Interest rate scenario testing is a continual process and the analysis of the expected values and variability for four critical risk measures (capital charges, cash flows, present value of profits, and interest rate spreads) forms the foundation for modifying investment strategies, adjusting asset duration and mix, and exploring hedging opportunities.
Separate account group contracts of AEGON The Netherlands are large group contracts that have an individually determined asset investment underlying the pension contract. The contracts are written with and without a guarantee. The applicable guarantee usually consists of profit sharing being the minimum of the actuarial interest of either 3% or 4% or the realized return (on an amortized cost basis). If profit sharing turns into a loss, the minimum guarantee becomes effective, but the loss in any given year is carried forward to be offset against any future surpluses during the contract period. In general, the guarantee is dependent on the life of the insured so that their pension benefit is guaranteed. Large group contracts also share technical results (mortality risk and disability risk). The contract period is typically five years and the premium levels are typically fixed over this period.
AEGON The Netherlands offers disability (WIA) and sick leave products to employers that cover the sick leave payments to employees that are not covered by social security and where the employers bear the risk. Over the past several years, the
DNB is responsible for safeguarding financial stability and supervises financial institutions and the financial sector.
Regulations pertaining to the supervision of financial institutions is referred to as “Wet Financieel Toezicht” (Act on
Netherlands. The objective of the AFM is to promote an orderly and transparent market process on the financial markets, the integrity of relations between market players and the protection of the consumer.
principle. This means that an insurance company that has a license issued by the regulatory authorities in its home country is allowed to conduct business, either directly or through a branch, in any country of the European Union.
(consolidated) income statement, extensive actuarial information, and detailed information on the investments.
Income tax attributable to policyholder return (57) (59) 3% (67) (66) (2%)
AEGON UK plc (AEGON UK) is AEGON UK’s principal holding company. It was registered as a public limited company at the beginning of December 1998.
�� Self-invested personal pensions (SIPPs), which provide a range of pre- and post-retirement investment options for high net worth customers, including insured funds and real estate.
EUR (41) million, a decline of 5% as the positive impact from growth of the business and cost reductions have been offset by the inclusion of the expenses related to the Asian regional office. The results for the regional office in Asia have been included since the first quarter of 2011, following the implementation of the new operational structure for the
A loss was reported in 2009 due to a one-off charge related to the sale of the company’s life insurance activities in Taiwan.
AEGON’s activities in Central & Eastern Europe operate through a number of different sales channels. These include tied agents, insurance brokers, call centers, online channels and, particularly in Poland, Romania, Turkey and Hungary, retail banks. Through tied agents, brokers and call centers,
Their specialized departments (e.g., actuarial, financial, and legal departments) meet periodically. They also engage in lobbying activities.
Privately Administered Pension Funds, as primary legislation, complemented by individual Norms, as secondary legislation.
AEGON-CNOOC offers non-life products (mainly short term accidental and short term health products) to all channels but sales are currently concentrated in the group channel for which the main product is group medical policies.
Reinsurance arrangements are regulated through IRDA’s regulations. AEGON Religare has reinsurance treaties with
Considering possible alternative outcomes of the arbitration process, AEGON expects that it will recover at least the book value as at December 31, 2011.
AEGON’s main subsidiaries and affiliates in Spain are: �� AEGON ESPAÑA, S.A. de Seguros y Reaseguros, S.A.
Caja Cantabria is one of the largest saving banks in northern
Where appropriate, additional protection is taken out through funds that are withheld for investment by the ceding company.
is sold via retail banks or La Poste, France’s post office.
In the Netherland’s, distribution of AEGON Variabele Lijfrente is through AEGON’s local banking and Independent Financial
The asset management entities are organized on a matrix basis according to investment platform line of business, managed by a global board. The main operating entities are: �� AEGON USA Investment Management LLC
As an insurance company, AEGON manages risk on behalf of its customers and other stakeholders. As a result, the company is exposed to a variety of underwriting, operational and financial risks. AEGON’s risk management and control systems are designed to ensure that these risks are managed effectively and efficiently.
�� To manage concentration of risk by avoiding an overconcentration of risk in particular areas.
informs the MB about any identified (near) breaches of overall tolerance levels, as well as any potential threats to the company’s solvency, liquidity or operations. Risk & Capital
The effects of the global crisis that began in 2008 continued to be felt throughout 2011 and were exacerbated by the
several de-risking initiatives to reduce exposure to movements in interest rates. In the US, a number of interest rate sensitive products were re-priced and product features adjusted to decrease interest rate risk. Fixed annuity sales in the US, meanwhile, were de-emphasized. In addition, in the UK, steps were taken to direct investments to lower risk long-dated UK
AXXX could also reduce the effectiveness of AEGON’s reinsurance and capital management actions, adversely affecting its life insurance operations.
Division (IMD); the following two portfolios have been put into run-off: � Americas spread-based business, with a total account balance of EUR 7,641 million as at December 31, 2011; � Americas payout annuities, with a total account balance of EUR 5,999 million as at December 31, 2011.
Changes in accounting policies may affect AEGON’s reported results and shareholders’ equity.
AEGON’s information technology or communications systems may result in a material adverse effect on AEGON’s results of operations and corporate reputation.
AEGON and AEGON’s significant shareholders may offer additional common shares in the future, and these and other sales may adversely affect the market price of the outstanding common shares.
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 effect an acquisition.
Board currently consists of nine members (for further details on the individual members of AEGON’s Supervisory Board, please see pages 113 and 114. The Supervisory Board makes recommendations to the General Meeting of Shareholders concerning all appointments and reappointments to and dismissals from both the Executive Board and the Supervisory
Board in line with the Remuneration Policy as adopted by the company’s General Meeting of Shareholders.
Dutch State. Of this amount, EUR 3 billion covered the original
(potential) conflict of interest were reported by the members of the Board in 2011.
Committee during 2011 and provided quarterly updates on the activities of the internal audit function, among others providing details on progress of internal audits. During the meetings, the Audit Committee held private sessions with the internal auditor, as well as with the external auditor, to discuss their findings. Members of the Executive Board were not present at these sessions.
In April 2010, shareholders reappointed Mr. Storm for a term of four years.
The current terms of Mr. Robert J. Routs, Mr. Irving W. Bailey,
Supervisory Board in 2008 and his current term will end in 2012. He is also a member of the Supervisory Board of
AEGON Group and regional units (internally equitable); avoiding any discrimination on nationality, race, gender, religious, sexual orientation, and/or cultural beliefs, etc.
AEGON has a pay philosophy which is based on total compensation. This means that total remuneration for fully functioning employees is aimed to be consistent with compensation levels in the market in which it operates and competes for employees. Total compensation typically consists of base salaries and, where in line with local market practices, variable compensation. Market survey information from reputable sources is used to provide information on competitive compensation levels and practices.
The Supervisory Board (Compensation Committee) has discussed and endorsed the 2011 total compensation for the Executive Board.
year. This part will be paid 50% in cash (=200) and 50% will be paid in shares (=200 / 4.727 1 = 42 shares). The remaining 600 will be deferred. The deferred part will vest in three equal parts, following the end of the performance period.
will be paid in shares (=100 / 4.727 = 21 shares). For all shares there is an additional holding period of three years.
The remaining part (60%) of variable compensation over the performance year 2011 is to be paid out in future years, subject to ex-post assessments, that may result in downward adjustments and subject to the additional conditions have been met. In each of the years 2013, 2014 and 2015 20% of the total variable compensation may be made available. Any payout will be split 50/50 in a cash payment and an allocation of shares (vesting). After vesting a retention (holding) period is applicable for a further three years, before shares are at the disposal of the Executive Board members (with the exception of shares sold to meet income tax obligations).
In accordance with the Dutch law, the record date is 28 days before the day of the General Meeting of Shareholders.
AEGON’s common shares are listed in Amsterdam, New York and London. AEGON has institutional and retail shareholders around the world. More than three-quarters of shareholders are located in North America, the Netherlands and the United
Every shareholder is entitled to attend the General Meeting, to speak and vote, either in person or by proxy granted in writing.
� The Nominating Committee 1 For further details, please see page 6. 2 Employment contracts for members of AEGON’s Executive Board are available on AEGON’s website (www.aegon.com). 3 See page 131 for the Remuneration Report Executive Board. The Remuneration Policy is also available on AEGON’s website (www.aegon.com).
AEGON has authorized capital of EUR 610 million, divided into 3 billion common shares, each with a par value of EUR 0.12 and one billion class A and class B preferred shares, each with a par value of EUR 0.25.
retains full voting rights on its preferred shares for a period limited to six months. Based on its current shareholding,
The General Meeting of Shareholders may cancel the binding nature of these nominations with a majority of two-thirds of votes cast, representing at least one half of AEGON’s issued capital.
In 2011, amendments were made to the Code of Conduct which became effective on January 1, 2012. These amendments were necessary to make an alignment with the current purpose and new Core Values and they also included AEGON’s strategic framework and AEGON’s new responsible investing approach.
� Provide reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on AEGON’s financial statements would be prevented or detected in a timely manner.
33 Trust pass­through securities 269 34 Subordinated borrowings 269 35 Insurance contracts 270 36 Insurance contracts for account of policyholders 271 37 Investment contracts 272 38 Investment contracts for account of policyholders 273 41 Defined benefit plans 275 42 Deferred revenue liabilities 281 43 Deferred tax 281 44 Other liabilities 284 46 Guarantees in insurance contracts 284 47 Capital and solvency 289 48 Summary of total financial assets and financial liabilities at fair value through profit or loss 291 49 Commitments and contingencies 293 50 Securities lending and repurchase activities and assets accepted and pledged as collateral 296 51 Business combinations 298 52 Group companies 299 53 Related party transactions 301 54 Events after the balance sheet date 306
Movements in foreign currency translation and net foreign investment hedging reserves – – – 1,054 – – 1,054 – 1,054
Changes in cash flow hedging reserve – – (731) – – – (731) – (731)
The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses for the reporting period. Those estimates are inherently subject to change and actual results could differ from those estimates. Included among the material (or potentially material) reported amounts and disclosures that require extensive use of estimates are: fair value of certain invested assets and derivatives, deferred acquisition costs, value of business acquired and other purchased intangible assets, goodwill, policyholder claims and benefits, insurance guarantees, pension plans, income taxes and the potential effects of resolving litigated matters.
When unrealized gains or losses arise on available-for-sale assets, VOBA is adjusted to equal the effect that the realization of the gains or losses (through a sale or impairment) would have had on VOBA. The adjustment is recognized directly in shareholders’ equity. VOBA is derecognized when the related contracts are settled or disposed of.
Gains or losses on buying reinsurance are amortized based on the assumptions of the underlying reinsured contracts.
Other assets include trade and other receivables, prepaid expenses, equipment and real estate held for own use.
Trade and other receivables are initially recognized at fair value and are subsequently measured at amortized cost.
Debt instruments are impaired if there is objective evidence that a loss event has occurred after the initial recognition of the asset that has a negative impact on the estimated future cash flows. A specific security is considered to be impaired when it is determined that it is probable that not all amounts due (both principal and interest) will be collected as scheduled. Individually significant loans and other receivables are first assessed separately. All non-impaired assets measured at amortized cost are then grouped by credit risk characteristics and collectively tested for impairment.
�� Any resulting change in the fair value of the plan assets.
In the latter case, the anticipated future investment returns are set by management on a countrywide basis, considering available market information and economic indicators. A significant assumption related to estimated gross profits on variable annuities and variable life insurance products in the United States and some of the smaller country units, is the annual long-term growth rate of the underlying assets. The reconsideration of this assumption may affect the original
A reasonably possible increase in the assumption on maintenance expenses AEGON uses to determine EGP margins would reduce net income by approximately EUR 57 million.
Valuation techniques are used when AEGON determines the market is inactive or quoted market prices are not available for the asset or liability at the measurement date. However, the fair value measurement objective remains the same, that is, to arrive at the price at which an orderly transaction would occur between market participants at the measurement date. Therefore, unobservable inputs reflect AEGON’s own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). These inputs are developed based on the best information available.
The fair values of debt securities are determined by management after taking into consideration several sources of data. When available, AEGON uses quoted market prices in active markets to determine the fair value of its debt securities. As stated previously, AEGON’s valuation policy utilizes a pricing hierarchy which dictates that publicly available prices are initially sought from indices and third party pricing services. In the event that pricing is not available from these sources, those securities are submitted to brokers to obtain quotes. The majority of brokers’ quotes are nonbinding. As part of the pricing process, AEGON assesses the appropriateness of each quote (i.e., as to whether the quote is based on observable market transactions or not) to determine the most appropriate estimate of fair value.
Investment contracts for account of policyholders 7,916 18,605 166 26,687 1 The investments for account of policyholders included in the table above represents those investments carried at fair value through profit or loss. 2 Borrowings included in the table above contain those borrowings that are carried at fair value through profit or loss. In measuring the fair value of derivatives credit spread is considered. Total borrowings on the statement of financial position also contain borrowings carried at amortized cost that are not included in the above schedule.
Similarly, during 2011, AEGON transferred certain financial instruments from Level III to other levels of the fair value hierarchy. The recorded amount of the total assets transferred was EUR 1,425 million (2010: EUR 1,600 million).
184 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF AEGON N.V. NOTE 4 the use of reinsurance). These risk management programs are in place in each country unit and are not only used to manage risk in each unit, but are also part of the Group’s overall risk management.
During periods of sustained low interest rates, AEGON may not be able to preserve margins as a result of minimum interest rate guarantees and minimum guaranteed crediting rates provided on policies. Also, investment earnings may be lower because the interest earnings on new fixed-income investments are likely to have declined with the market interest rates. Mortgages and redeemable bonds in the investment portfolio are more likely to be repaid as borrowers seek to borrow at lower interest rates and AEGON may be required to reinvest the proceeds in securities bearing lower interest rates. Accordingly, net income declines as a result of a decrease in the spread between returns on the investment portfolio and the interest rates either credited to policyholders or assumed in reserves.
Debt securities - carried at amortized cost 168 – – – – – – – – 168
Other loans - carried at amortized cost 3,093 – – – – – 2,147 2,147 1,016 1,962
The collateral included in the other column represents the policyholders account value for policy loans. The excess of the account value over the loan value is included in the surplus collateral column. For further information on the policy loans we refer to note 22.1.
EUR 7,998 million (2010: EUR 9,317 million). The loan to value (LTV) amounts to about 64% (2010: 66%). Of the portfolio 2.37% (2010: 2.68%) is in delinquency (defined as 60 days in arrears). In 2011, AEGON Americas recognized
196 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF AEGON N.V. NOTE 4
AEGON’s RMBS portfolio includes exposure to securitized home loans classified as Alt-A, fully owned by AEGON USA.
As part of AEGON’s RMBS portfolio, AEGON holds EUR 621 million of securitized Negative Amortization mortgages with net unrealized losses of EUR 284 million at December 31, 2011, fully owned by AEGON USA. Negative amortization mortgages (also known as Option ARMs) are loans whereby the payment made by the borrower may be less than the accrued interest due and the difference is added to the loan balance. When the accrued balance of the loan reaches the negative amortization limit (typically 110% to 125% of the original loan amount), the loan recalibrates to a fully amortizing level and a new minimum payment amount is determined. The homeowner’s new minimum payment amount can be significantly higher than the original minimum payment amount. The timing of when these loans reach their negative amortization cap will vary, and is a function of the accrual rate on each loan, the minimum payment rate on each loan and the negative amortization limit itself. Typically, these loans are estimated to reach their negative amortization limit between 3 and 5 years from the date of origination.
Amortization mortgages of EUR 1 million (2010: EUR 1 million), which are classified as fair value through profit or loss.
AFS RMBS - Subprime mortgage portfolio of AEGON USA. Additionally, AEGON USA has investments in RMBS Subprime mortgages of EUR 4 million (2010: EUR 5 million), which are classified as fair value through profit or loss.
There are no individual issuers rated below investment grade in the ABS – CDO sector which have unrealized loss positions greater than EUR 25 million.
There are no other individual issuers rated below investment grade in the ABS – other sector which have unrealized loss positions greater than EUR 25 million.
The Financial sector is further subdivided into Banking, Brokerage, Insurance, REIT’s and Financial other. Companies within AEGON’s financial sector are generally high in credit quality and, as a whole, represent a large portion of the corporate debt market.
The value of AEGON’s investments in deeply subordinated securities in the financial services sector may be significantly impacted if issuers of certain securities with optional deferral features exercise the option to defer coupon payments or are required to defer as a condition of receiving government aid. The deeply subordinated securities issued by non-US
Payments continue to be made on AEGON’s holdings in accordance with the original bond agreements.
“must pay” securities or have optional deferral language with cumulative coupons. AEGON evaluated the near-term prospects of the issuer and it is believed that the contractual terms of these investments will be met and these investments are not impaired as of December 31, 2011.
In each case where a recovery was taken on structured securities, improvements in underlying cash flows for the security were documented and modeling results improved significantly. Recoveries on non-structured securities were supported by documented credit events combined with significant market value improvements.
The composition of shares by industry sector in an unrealized loss position held by AEGON Americas, AEGON
Run-off businesses 43 – – – – – 43 – 43
In 2010, 4,266,107 shares were granted to participants in the 2010 Long Term Incentive Plan, of which 52,314 shares were subsequently forfeited. The shares were granted using the share price of EUR 4.851. In 2011, 199,042 shares were forfeited. At December 31, 2011, 4,014,751 granted shares were outstanding.
No SARs and share options were granted in 2011, 2010 and 2009. With regard to the SARs and options granted before 2009, no share options were exercised and no SARs were paid during 2011, 2010 and 2009. Similarly, no cash is received from exercise of share options during 2011, 2010 and 2009.
There are no interest charges and related fees that are classified for segment reporting purposes as non underlying earnings (2010: EUR 27 million; 2009: nil).
Weighted average number of common shares for diluted earnings per share calculation (millions) 1,852 2,165 1,587
Receivables out of share lease agreements – – – 19 19 19
AEGON Levensverzekering N.V., a wholly owned subsidiary of AEGON N.V. via AEGON Nederland N.V., at market value.
Total investments for account of policyholders at fair value through profit or loss, excluding derivatives 1 141,397 145,103
The reinsurance business being retained by AEGON, which is comprised primarily of the variable annuity guarantee business, is substantially hedged for financial market risks and produces normalized results which are negligible.
258 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF AEGON N.V. NOTE 28 - 28.1
Refer to note 49 for a summary of contractual commitments for the acquisition of general account real estate held for own use.
Total net cash flows from operating activities increased by EUR 1,003 million to EUR 2,266 million inflow
The share premium account reflects the balance of paid-in amounts above par value at issuance of new shares less the amounts charged for share dividends.
On November 30, 2009, AEGON repurchased 250 million of convertible core capital securities. The total payment to the Dutch government amounted to EUR 1.15 billion. Under the terms of AEGON’s agreement with the Dutch government, the premium for repurchase amounted to EUR 108 million based on the volume weighted average share price of AEGON
until October 14, 2018. 3 The coupon of the EUR 203 million bonds was originally set at 7.125% until March 4, 2011. Subsequently, the coupon has been reset at 4.26% until 4 If the bonds are not called on the respective call dates and after consecutive period of ten years, the coupons will be reset at the then prevailing effective yield of ten-year Dutch government securities plus a spread of 85 basis points.
USD 225 million 2 7.65% Semi–annually, December 1 1996 2026 n.a. 106 91
Gross premium and deposits – existing and new business 7,076 5,750 12,826
The securities were issued under the Dutch SAECURE program. The net proceeds were used to finance a part of the existing Dutch mortgage portfolio of AEGON The Netherlands.
GBP 250 million Medium-Term Notes 6.125% December 15 1999 / 31 296 286
Floating-rate - Expiring within one year 2,638 318 - Expiring beyond one year 985 2,245
The defined benefit plans were unfunded by EUR 524 million at December 31, 2011 (2010: EUR 171 million unfunded).
AEGON USA also sponsors supplemental retirement plans to provide senior management with benefits in excess of normal pension benefits. These plans are unfunded and non-qualified under the Internal Revenue Service Code.
Health care cost trend rate assumed for next year 2.00% 0.00–2.00%
Assumptions used to determine net periodic benefit costs for the year ended December 31, 2011: Discount rate 5.40% 5.70%
Product balances as of December 31, 2011 were EUR 495 million in fixed annuities (2010: EUR 572 million) and
Borrowings not related to capital funding of insurance activities (8,670) (7,331)
48 SUMMARY OF TOTAL FINANCIAL ASSETS AND FINANCIAL LIABILITIES AT FAIR VALUE THROUGH
Effective October 31, 2011, AEGON entered into a Joint Venture contract with Banca Civica, an entity created by a
�� AEGON-CNOOC Life Insurance Company Ltd, Shanghai (China), life insurance company (50%)
�� AEGON Sony Life Insurance Cy, Tokyo (Japan), life insurance company (50%)
�� Banca Civica joint venture partners: CAN Vida y Pensiones, SA de Seguros (Spain), life insurance and pension company (50%), Caja Burgos Vida Compania de Seguros de Vida, SA (Spain), life insurance and pension company
Willem F.C. Stevens (up to April 22, 2009) – – 20,762
Securities and Exchange Commission. The subordinated notes will bear interest at a fixed rate of 8.00% and will not be cumulative and are priced at 100% of their principal amount. The coupon may be cancelled under certain circumstances. The proceeds from the issuance of the subordinated notes will be used for general corporate purposes.
Income statement of AEGON N.V. Income statement of AEGON N.V. Income statement of AEGON N.V.
Notes to the financial statements of AEGON N.V. Notes to the financial statements of AEGON N.V. Notes to the financial statements of AEGON N.V.
Realized gains and losses through income statement 96 – – 96
Other assets include derivatives with positive fair values of EUR 158 million (2010: EUR 169 million).
Vereniging AEGON has agreed to exercise one vote only per preferred share, except in the event of a ”special cause”, such as the acquisition of a 15% interest in AEGON N.V., a tender offer for AEGON N.V. shares or a proposed business combination by any person or group of persons, whether individually or as a group, other than in a transaction approved by the Executive Board and Supervisory Board. If, in its sole discretion, Vereniging AEGON determines that a “special cause” has occurred, Vereniging AEGON will notify the General Meeting of Shareholders and retain its right to exercise the full voting power of 25/12 vote per preferred share for a limited period of six months.
The balance of the revaluation account, which includes revaluation reserves for real estate and investments that do not have a frequent market listing, consists for EUR 7,893 million (2010: EUR 5,970 million) of items with positive revaluation and for EUR (1,699) million of items with negative revaluation (2010: EUR (2,420) million).
USD 250 million floating LIBOR rate 1 Quarterly, December 15 2012 212 212 212
The repayment periods of borrowings vary from within one year up to a maximum of 28 years. The interest rates vary from 4.125% to 7.000% per annum. The market value of the long-term borrowings amounts to EUR 3,414 million
Our responsibility is to express an opinion on the company financial statements based on our audit. We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. This requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the company financial statements are free from material misstatement.
7. The Company’s policy on reserves and dividends shall be determined and can be amended by the Supervisory Board, upon the proposal of the Executive Board. The adoption and thereafter each amendment of the policy on reserves and dividends shall be discussed and accounted for at the General Meeting of Shareholders under a separate agenda item.
The objective of Vereniging AEGON is the balanced representation of the interests of AEGON N.V. and all of its stakeholders, including shareholders, AEGON Group companies, insured parties, employees and other relations of the companies.
US Shelf Registration through the sale of 173,604,912 common shares of AEGON N.V. at a price of EUR 5.20 per share in March 2011.
Reporting Standards as adopted by the European Union and International Financial Reporting Standards as issued by the International Accounting Standard Board. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.
(8) Incorporated by reference to Exhibit 4.14 to Form 20-F 2004 filed with the SEC on March 29, 2005.
AEGON may make one or more interim distributions to the holders of common shares and/or to the holders of preferred shares, the latter subject to the maximum dividend amount set forth below.
AEGON continued to be AEGON’s major shareholder with the same voting rights as prior to the transaction (for further details on Vereniging AEGON please refer to the “Major Shareholder” section of this Annual Report). The Dutch State did not have voting rights at the General Meeting of Shareholders as a result of the transaction.
the description below should not be read as extending by implication to matters not specifically referred to herein.
AEGON’s common shares or payments in respect of AEGON’s common shares are attributable.
�� Such Non-Resident Shareholder does not carry out and has not carried out employment activities in the Netherlands, does not serve and has not served as a director or a board member of an entity resident in the Netherlands and does not serve and has not served as civil servant of a Dutch public entity with which the holding of or income derived from AEGON’s common shares is connected; and
Entities that are resident of a country which is a member of the European Union and that qualify for the application of the EU Parent Subsidiary Directive are eligible for an exemption of dividend withholding tax, provided certain conditions are met (one of the conditions is that the parent company that is resident in the European Union must have a shareholding of at least 5%).
�� Does not perform independent personal services from a fixed base in the Netherlands to which the holding of
No Dutch value added tax will arise in respect of payments in consideration for the acquisition or the disposition of AEGON’s common shares, or in respect of payments by us under AEGON’s common shares.
Based on the nature of AEGON’s gross income, the average value of AEGON’s gross assets, and the active conduct of AEGON’s insurance business, AEGON does not believe that it could be classified as a Passive Foreign Investment
Company (“PFIC”). If AEGON were treated as a PFIC in any year during which a US holder owns common shares, certain adverse tax consequences could apply. Investors should consult their tax advisors with respect to any
Monoline insurer is an insurance company which issues types of insurance for securities and bonds to cover the interest and principal when an issuer defaults.
Reinsurance contract is an insurance contract issued by one insurer to compensate another insurer for losses on one or more contracts issued by the cedant.
� Lowering of one or more of AEGON’s debt ratings issued by recognized rating organizations and the adverse impact such action may have on the company’s ability to raise capital and on its liquidity and financial condition.