Asset Management 376 Risk factors Aegon N.V. 397 Compliance with regulations 398 Property, plant and equipment 398 The offer and listing 398 Material contracts 398 Exchange controls 399 Employees and labor relations 400 Dividend policy 401 Memorandum and Articles of Association 403 Taxation 410 Purchases of equity securities by the issuer and affiliated purchasers 411 Principal accountant fees and services
These trends are global and Aegon is proud that we use our long years of expertise to help 29.9 million customers in over 20 countries to secure their financial futures. Our contribution to our customers’ lives can clearly be seen as Aegon paid over
Drive for Growth The Drive for Growth businesses are the cornerstone of our growth strategy as they have the highest potential for future capital generation growth. Therefore we direct the vast majority of our investments into these businesses. I am pleased to see positive momentum in the second half of 2019 in Life and
If a Scale-up for Future business does not fulfil our expectations, we review the position in order to optimize our capital allocation.
Supporting our communities We also take steps to help improve the communities in which we operate. During 2019, Aegon and Transamerica contributed over EUR 9 million in support of local communities through cash donations and employee volunteering. For instance, colleagues built affordable houses in Denver with Habitat for Humanity, and helped people address the problem of excessive debt in the Netherlands with a financial coaching program.
and its expertise in pensions, life insurance, asset management and other financial services more relevant than ever before for customers. We are proud to provide important insights to policymakers on shaping retirement systems fit for the 21st Century. Aegon can fulfill these important functions due to our mutually beneficial relationships with a wide range of stakeholders. For instance, our 23,757 employees received
The full Supervisory Board held a meeting in New York with the Management Board in June to further discuss the grouping of Aegon’s portfolio of businesses into three distinct categories: Manage for Value, Drive for Growth, and Scale-up for Future. Supervisory Board members also visited offices of our US business, Transamerica, during the year to connect with the business and staff. We were particularly interested in talking to people directly involved in partnerships with thirdparty administrators to administer our US annuity, insurance and long-term care business lines. These partnerships enable
Some of the distribution channels are owned by Aegon: we serve customers through Origen Financial Services in the UK and
Definitions Financial capital represents the funds to which Aegon has access. This includes debt and equity capital. Human and intellectual capital refers to individual knowledge, skills and capacities in Aegon’s workforce, as well as the company’s institutional knowledge, processes and expertise. Social and relationship capital covers relationships both within and outside the company. These include relationships with customers, employees, suppliers and other business partners.
To achieve this, the parties involved should tap into innovation and technology. They should promote healthy lifestyles, financial literacy, lifelong learning and age-friendly communities.
As part of the New Social Contract, individuals may delay retirement and/or engage in part time or flexible contract work after reaching traditional retirement age. This will have financial benefits, but will also support health and happiness by keeping people more closely engaged with society as they age.
On wealth The world’s aging population requires asset accumulation solutions that pursue stable asset growth, and insurance solutions to protect that capital. We seek to serve our customers from the accumulation phase of life up and through retirement.
In addition, the increased expectations for the financial sector with respect to protection of data, data privacy, the use of data by the financial sector and the gatekeeper role of the financial sector with respect to anti-money laundering and combating terrorism financing have resulted in a significant increase in regulation in these areas.
Infrastructure Regulation on derivatives, central counterparties and trade repositories (EMIR), additional requirements were introduced to improve transparency and reduce the risks associated with the derivatives markets. In this context, recently additional collateral/margin requirements came into effect.
Aegon’s value creation, financial strength, competitive position or reputation. We conduct this scan by engaging with relevant internal and external experts, as well as selected stakeholders like NGOs, business partners and customers. While we see many opportunities for our business, we are also mindful of potential challenges ahead. The BES was last completed in the third quarter of 2019, and since then a pandemic has been declared as a result of the coronavirus outbreak.
These and other relevant laws and regulations, as well as our responsibility to safeguard client and employee data from malicious actors worldwide are our priorities and require our focus. We aim to uphold security standards to protect the confidentially, integrity and availability of data, and to avoid the risk of business disruptions and reputational damage.
Wide availability and the rapidly declining cost of genomic testing increases the ‘information gap’ in underwriting: consumers may know more about their health than their insurers. This potentially could lead to adverse risk selection in our insurance portfolios. Therefore, we aim to use new technologies and knowledge to strengthen our underwriting without materially reducing the availability of our solutions for customers. WinSocial, the solution for diabetes patients piloted by our Brazilian join venture, is a vivid example of our attempts.
We also continue expanding our Aegon Asset Management business globally. Asset management is both highly scalable and complementary to Aegon’s worldwide life insurance and pension offerings.
We administer USD 216 billion in retirement plan assets in the US making us a top ten defined benefit and defined contribution provider. In the UK, we administer
We are one of the largest insurers in the Netherlands, where we administer EUR 71 billion of assets of which
Net income 1,528 744 105.3% Net income increased mainly as a result of high one-time charges in 2018 and realized gains on investments in 2019: • Other charges in 2018 were high and driven by restructuring charges, book losses on divestments and a litigation settlement in the US • Realized gains were driven by capital optimization of the asset portfolio in the
Development Goals (SDGs) where we can, both as a financial services provider and as an investor. We recognize that sustainable development is in the long-term interest of business and the global economy, and that genuine sustainable development will not be possible without cooperation between the private and public sectors, worldwide.
Contribution to target 13.2 • Support for Paris Pledge for Action and Dutch National Climate Agreement, working to reduce carbon emissions.
By delivering reliable insurance solutions and effective investment management services, we help our customers protect their lives, legacies and property.
We believe that to truly serve our customers and achieve our purpose – to help people achieve a lifetime of financial security – we must be agile, and continuously evolve and adapt to the changing needs of our people and our customers.
Our employees are critical stakeholders as their labor, insight and innovation is central to Aegon’s overall value proposition. As such, we invest in their personal and professional development, and seek to encourage a spirit of lifelong learning.
We seek to identify one or more women candidates for each open position.
Investors In 2019, we delivered a total of EUR 899 million to Aegon investors. Of this, EUR 611 million was in dividends to shareholders and the remaining EUR 288 million was delivered to Aegon bondholders.
Through AnalitiQs, we conducted a study of gender pay disparity with Aegon the Netherlands and the Group
We strive to work together with tax authorities in a constructive and transparent manner. Our Horizontal Monitoring Agreement with the Dutch tax authorities shows our commitment to this principle. This includes public discussion and disclosure of policies and principles, as well as the overall governance and oversight of our tax position.
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:  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;  the tax consequences are considered as part of every major business decision; and  Aegon’s tax control framework is constantly evolving to a higher maturity level.
The Aegon Global Tax team is continuously trained on tax law, jurisprudence and/or other relevant developments. To ensure that tax dilemmas are dealt with in accordance with our Global Tax
Corporate governance Aegon is incorporated and based in the Netherlands. As a company established and listed in the Netherlands, Aegon must comply with Dutch law and is subject to the Dutch Corporate Governance Code.
Aegon's largest shareholder is Vereniging Aegon, a Dutch association with a special purpose to protect the broader interests of the Company and its stakeholders.
Supervisory Board Aegon's Supervisory Board oversees the management of the Executive Board, in addition to the Company's business and corporate strategy. The Supervisory Board must take into account the interests of all Aegon stakeholders. The Supervisory Board operates according to the principles of collective responsibility and accountability.
Average Price of the common shares of the five trading days preceding this transaction. The repurchase of common shares
Special control rights As a matter of Dutch corporate law, the common shares and the common shares B offer equal full voting rights, as they have equal nominal value (EUR 0.12). The Voting Rights Agreement entered into between Vereniging Aegon and Aegon provides that under normal circumstances, i.e. except in the event of a
Aegon does not fully apply. In this case, Aegon adheres, as much as is possible, to the spirit of the Code.
She is Chairman of the Supervisory Board Risk Committee, member of the Supervisory Board Audit Committee and member of the Supervisory Board Nomination and Governance Committee.
Mr. Robert Dineen stepped down as member of the Board on October 11, 2019, in light of his appointment as Non-Executive
II Directive, capital generation under Solvency II and on the IFRS
Management Board members and the Company Secretary and interviews with all these persons. The Board review assessed the functioning of the Board as a whole, the composition, processes and information, the functioning of the Committees and the interaction within the Board and with the Executive and Management Board. The results of the assessment were discussed in May 2019 and the Supervisory Board acted on the observations and recommendations that were then discussed and were listed in the assessment report.
Other Management Board members and senior managers attended the meetings when relevant for the discussion.
Board Remuneration Report, which contains a summary of the Supervisory Board Remuneration Policy which applied to 2019, and the Supervisory Board remuneration over the recent years. The fourth chapter presents the proposed 2020
Aegon's Executive Board consisted of two members in 2019: Alexander R. Wynaendts (Chief Executive Officer and Chairman of the Executive Board) and Matthew J. Rider (Chief Financial
Board and succeeds Adrian Grace who will retire from the company on March 31, 2020.
On August 12, 2019 Aegon announced that it would nominate Lard Friese for appointment to the Executive Board at the Annual General Meeting of Shareholders on May 15, 2020, in order to succeed Mr. Wynaendts. If Mr. Friese is appointed by the shareholders to the Executive Board, the Supervisory
II selection criteria in 2019. The selection of these type of positions is mandatory for most financial companies based in Europe, as a result of their sector specific European Directives
Remuneration Principles Based on the Human Resources Strategy, Aegon has formulated the following Remuneration Principles, which are the foundation for all remuneration policies and practices within the Group:  Aegon remuneration is employee-oriented by: fostering a sense of value and appreciation in each individual employee; promoting the short- and long-term interests and well-being of all Aegon staff via fair compensation, pension and/or other benefits; supporting employees’ career development; and supporting the (international) mobility of its staff;  Aegon remuneration is performance-related by: establishing a clear link between pay and performance by aligning objectives and target setting with performance evaluation and remuneration; reflecting individual as well as collective performance in line with Aegon's long-term interests; enhancing the transparency and simplicity of Aegon Group remuneration, consistent with the principle of pay for performance; and avoiding any pay for non-performance;  Aegon remuneration is fairness-driven by: promoting fairness and consistency in Aegon’s remuneration policies and practices, with remuneration packages that are well-balanced across the different echelons within Aegon and its business units; avoiding any discrimination in Aegon’s remuneration structures, including, among others, discrimination based on nationality, race, gender, religion, sexual orientation, and/
Risk Takers and the risk mitigating measures that are applied to the remuneration of these individuals, Risk Management is involved in deciding which positions are deemed Material
Board in accordance with the Dutch Civil Code (article art 2:135b)
Board members do not receive any performance or equityrelated compensation, and do not accrue pension rights with the Company. These measures are designed to ensure the independence of Supervisory Board 58 59CONTENTS
th er n o n -fin an cial in fo rm atio n contributions 2017-2019, g) benefits 2017-2019, h) total compensation in recent years.
Additionally, variable compensation of the Executive can be adjusted downwards (i.e. malus) or clawed-back in case certain performance has not been achieved in a sustainable way, such as (but not limited to): significant risk and compliance incidents, insufficient response to such incidents and/or insufficient evidence of embedding of good standards of practice, such as sound and responsible business practices and integrity of products and services delivered.
Company's strategy, risk tolerance, long-term interests and sustainability. The variable compensation award is based on annual performance against a number of Aegon and personal performance indicators  These performance indicators are a mix of financial and non-financial performance indicators with a one-year performance horizon.
 The result of a single performance indicator must exceed its predefined threshold level, before this indicator can contribute to the overall performance result. When an indicator result is below this threshold, the contribution of this indicator to the overall performance result is zero.
Scope Performance indicators Definition Aegon financial Net deposits Net deposits is the difference between gross deposits and withdrawals. If gross deposits exceed withdrawals, the result is a net inflow of customer money. If withdrawals exceed gross deposits, the result is a net outflow. Gross deposits is a sales metric and reflect amounts paid by policyholders (inflows) on insurance and investment contracts to which deposit accounting is applied.
Financial strategy execution Consists of five personal milestones which were key for the strategy execution within the Finance function in 2019.
Personal 10% Sustainable Organization 1 year 10% Handover to successor 1 year
Aegon non-financial Relational NPS The Net Promoter Score (NPS) is a customer loyalty metric based on the percentage of customers that would likely recommend our products and services to friends and family (scores 9 and 10) minus the percentage that would not be likely to do so (scores 0 to 6). The Relational NPS measures the whole scope of the client relationship: 1) the contact experience, 2) the products/prices and 3) our brands. The target is the 2019 result +3.
Handover to successor Contains two personal milestones for a successful handover to the new CEO.
 Increased transparency with additional disclosure on the remuneration elements which can be offered to the Executive.  The Variable Compensation award will be based on performance indicators from pre-defined performance indicator categories as described in this Policy (see also D.1).
This Policy defines which remuneration elements, within each of these four categories, the Supervisory Board must or may include in the Executive’s Board Agreement. Remuneration elements which are not included in this Policy cannot be offered to Executives.
Annual General Meeting of Shareholders on May 15, 2020: An annual gross Cash Base Fee of EUR 1,485,000.
C.5.5 Termination Fee The Supervisory Board may include a Termination Fee clause in the Executive’s Board Agreement for certain scenarios for a Fee up to or equal to the total annual Base Fee.
Mix Mandatory Categories Examples Aegon financial Shareholders Relative Total Shareholder Return
E.2 No hedging or insurance to undermine risk alignment The Executive is not allowed to use personal hedging strategies or insurance that could be used to undermine the risk alignment effects imbedded in their remuneration arrangements.
In addition, the Supervisory Board selects a secondary peer group according the following criteria, in order to monitor alignment with the General Industry in the Netherlands:  Industry: General Industry and listed on the AEX;  Size: Average Market Capitalization, Employees, Revenue and
• In 2019, women made up 49% of Aegon’s workforce (unchanged from 49% in the previous year). Women accounted for 29% of the Company’s senior management (down from 33% the previous year). For details of our Supervisory, Executive and Management Board members, see pages 41-45.
Under the policy, Aegon excludes investment in some areas, including controversial weapons, tobacco, oil sands and certain coal mining companies.
Insurers and reinsurers are required to hold eligible own funds in addition to the assets held to cover the technical provisions in order to ensure that they are able to meet their obligations over the next 12 months with a probability of at least 99.5%
at least equal to a floor, as further defined in the Solvency
Tier 1 and Tier 2 capital instruments between the accounting consolidation and deduction and aggregation part of the Group are described in more detail in the ‘Capital and Liquidity’
Commission. Earlier in 2019, separate consultations have taken place on disclosure and reporting requirements under Solvency
The IAIS’ ultimate goal, by a date yet to be determined, is a single ICS (referred to by the IAIS as group-wide prescribed capital requirement (PCR)) and that includes a common methodology by which one ICS achieves comparable (i.e.
For more information about recent developments on Solvency II, please refer to section 'Regulation and supervision'.
Group Solvency II ratio 201% 211% 1 The Solvency II ratios are estimates and subject to supervisory review. 2 Aegon Bank is not included in the Group Solvency II ratio.
The capitalization level and shareholders' equity of the operating units can be impacted by various factors (e.g. general economic conditions, capital markets risks, underwriting risk factors, changes in government regulations, legal and arbitration proceedings). To mitigate the impact of such factors on the ability of operating units to transfer funds, the operating units hold additional capital in excess of minimum regulatory solvency requirements.
Aegon's Tier 2 capital consists of the new issuance of subordinated notes by Aegon Funding Company LLC (AFC)
When applying the eligibility restrictions, Aegon determines its tiering limits based on:  EEA entities - representing the part of the Group covered by the Accounting Consolidation based method, for which tiering limits are based on the SCR of the consolidated part of the Group, i.e. the consolidated group SCR; and  Non-EEA entities - representing the part of the Group covered by the Deduction & Aggregation method. If a prudential regime of an equivalent or provisionally equivalent thirdcountry applies, such as the regulatory regimes in the United
Tier 2 subordinated notes with a fixed coupon of 5.1%, which is issued by Aegon Funding Company LLC (AFC).
Reinsurance ceded Aegon uses reinsurance to manage and diversify risk, limit volatility, improve capital positions, limit maximum losses, and sometimes to enter into strategic partnerships and gain access to reinsurer technology. While the objectives and use can vary by region due to local market considerations and product offerings, the use of reinsurance is coordinated and monitored globally.
Risks and risk management are also referred to in various other sections of Aegon's Integrated Annual Report, as they are relevant throughout the Company, for its various activities and its financial results. Relevant sections are: Aegon’s business environment on page 14; note 4 on Financial Risks in the notes to the consolidated financial statements on page 187; and Risk factors on page 376.
The ERM framework covers the ERM components as identified by the Committee of Sponsoring Organizations of the Treadway
The tolerances are further developed into measures, limits and thresholds that have to be complied with to remain within the tolerances.
Risk control A system of effective controls is required to mitigate the risks identified. In Aegon's ERM framework risk control includes risk governance, risk policies, internal control framework, model validation, risk embedding, risk culture and compliance.
Medium to high - Underwriting risk is Aegon’s core business and meets customer needs.
Underwriting risk Underwriting risk relates to the products sold by Aegon's insurance entities, and represents the risk of incurring losses when actual experience deviates from Aegon's best estimate assumptions on mortality, morbidity, policyholder behavior, P&C claims and expenses. Aegon has a preference to selectively grow underwriting risk, but this must work handin -hand with a strong underwriting process. Aegon's earnings depend, to a significant degree, on the extent to which claims experience is consistent with assumptions used to price products and establish technical liabilities. Changes in, among other things, morbidity, mortality, longevity trends and policyholder behavior may have a considerable impact on the Company's income.
For a description of the main roles and responsibilities of the SBRC see the section on the Risk Committee on page 50 of the Report of the Supervisory Board in this Annual Report.
Aegon hence continues to prepare itself for the worst Brexit outcome. The main consequences of a ‘hard Brexit’ have been identified and contingency plans are in place. These plans are updated on a continuous basis. Focus areas for Aegon have been derivatives, data transfer and cross border policies.
December 31, 2017, including certain comparative discussion on our operating results for the years ended December 31, 2017 and December 31, 2018, please refer to the section Results of operations on pages 106 to 142 in Aegon's 2018 Integrated
Income tax The effective tax rate amounted to 18%, mainly as a result of regular tax exempt income items and the use of tax credits in the United States, and the one-time benefits from the own employee pension plan moving into surplus. The effective tax rate on underlying earnings before tax amounted to 16%.
Accident and health insurance premiums 228 28 110 366 219 29 102 351
Underlying earnings before tax for the Netherlands Underlying earnings before tax for the Netherlands in 2019 increased by 5% compared with 2018 to EUR 648 million.  Underlying earnings before tax from Life increased by 8% compared with 2018 to EUR 497 million, driven by a higher investment margin, reflecting lower profit sharing, and lower expenses.
Underlying earnings before tax for the United Kingdom Underlying earnings before tax in the United Kingdom increased by 9% compared with 2018 to EUR 139 million in 2019.  Underlying earnings before tax from Existing Business declined by 8% compared with 2018 to EUR 98 million in 2019, reflecting net outflows, including upgrades to the
Commissions and expenses for the Netherlands Commissions and expenses increased compared with 2018 to EUR 883 million in 2019. Operating expenses were up by 15% compared with 2018 to EUR 809 million in 2019, reflecting the acquisition of Robidus in September 2018, as well as higher restructuring and one-time expenses.
Gross deposits in Asia declined to USD 8 million in 2019 compared with USD 151 million in 2018 as gross deposits in Japan have no longer been reported since the signing in May 2019 of the divestment agreement of Aegon’s 50% stake in the variable annuity joint ventures in Japan.
Net income / (loss)‍ attributable to: Owners of Aegon N.V. 1,528 744 2,361
Income tax relating to items that may be reclassified (632) 494 927
Issuance and purchase of treasury shares - (30) - - - - (30) - (30)
Items that may be reclassified subsequently to profit or loss: Gains / (losses) on revaluation of available-for-sale investments - - (2,142) - - - (2,142) - (2,142)
Early adopted Interest Rate Benchmark Reform January 1, 2020 Yes See below for comments
Total comprehensive income / (loss)‍ attributable to: 1 As reported in Aegon’s 2018 Integrated Annual Report dated March 21, 2019.
published the final version of the IFRS 17 Insurance Contracts standard. Prior to its finalization, the IASB issued an amendment to IFRS 4 Insurance Contracts (the predecessor standard to IFRS 17) that provides for a qualifying insurer a temporary exemption that permits, but does not require, the insurer to apply IAS 39 Financial Instruments: Recognition and Measurement rather than IFRS
Money Markets and other short-term investments SPPI 2,724 - 3,126 -
Debt securities – Carried at fair value 26,723 8,989 20,112 22,296 1,364 1,244 1,283 3 82,014 Money market and other short-term investments- carried at fair value 255 193 2,164 112 - - - - 2,724
In November 2018, the IASB agreed to start the process to amend IFRS 17 to defer the mandatory effective date of IFRS 17 by one year (original effective date was January 1, 2021). Subject to IASB due process, entities will be required to apply IFRS 17 for annual periods beginning on or after January 1, 2022. The IASB noted that given the considerations of the proposed amendments to IFRS
 The cash flows hedge reserve relating to the period after the IBOR reform is expected to take effect, is not recycled solely because cash flows are expected to change.
are offset by the fair value movements of the hedged item, and the resulting hedge ineffectiveness, if any, is included in this line.
Leases that do not transfer substantially all the risks and rewards of ownership are classified as operating leases. Payments made under operating leases, where the Group is the lessee, are charged to the income statement on a straight line basis over the period of the lease.
Moreover, concentration of financial risks are measured in Aegon business planning cycle. As part of business planning, the resilience of Aegon's business strategy is tested in several extreme event scenarios. In the Adverse Financial scenario, financial markets are stressed without assuming diversification across different market factors. Within the projection certain management actions may be implemented when management deems this necessary.
Several bonds in Aegon's Americas' portfolio are guaranteed by Monoline insurers. This is shown in the table above in the column
Insurance, SCOR and Reinsurance Group of America. Aegon had large government exposures, the largest being in the Americas, the Netherlands and Germany. Highly rated government bonds and government exposure domestically issued and owned in local currency are excluded from the Credit Name Limit Policy.
Past due and / or impaired assets 95 1,051 210 19 - - - - 210 19
Past due and / or impaired assets - 27 - - 385 1,399 1,784 1 Includes investments of Holding and other activities.
Monoline insurers EUR 272 million (2018: EUR 178 million) of the bonds in Aegon Americas' and Asia's portfolios are insured by Monoline insurers.
portfolios, are as follows as of December 31, 2019, and December 31, 2018.
Additionally, Aegon Americas has investments in RMBS of EUR 67 million (December 31, 2018: EUR 35 million), which are classified as fair value through profit or loss.
of EUR 3 million (December 31, 2018: EUR 6 million), which are classified as fair value through profit or loss. ABS are securitizations of underlying pools of credit card receivables, auto financing loans, small business loans, bank loans, and other receivables.
Within the Energy sub-sector, Aegon Americas and Aegon the Netherlands hold EUR 3,961 million (December 31, 2018: EUR 3,802 million) of AFS bonds, of which EUR 3,844 million (December 31, 2018: EUR 3,592 million) is held by Aegon Americas and
The composition of shares by industry sector in an unrealized loss position held by Aegon Americas and Aegon the Netherlands at December 31, 2019, and December 31, 2018 is presented in the following table.
Total 2019 1 Common shares in Holding and other activities includes the elimination of treasury shares in the general account for an amount of EUR nil million.
VOBA fair value adjustment of EUR 151 million gain (2018: loss of EUR 88 million; 2017: gain of EUR 135 million).
Unconsolidated investment funds 26,450 (8,158) 17,720 1 Numbers in previous years recorded as “Other” are now recorded in the line “Derivatives”.
The weighted effective interest rate on short-term deposits in 2019 was 0.38% negative (2018: 0.39% negative) and these deposits have an average maturity of 19 days (2018: 28 days).
(refer to note 24 Derivatives) and net purchase of investments for account of policyholder (refer to note 23 Investments for account of policyholders) partially offset by outflow from results from financial transactions (refer to note 10 Results from financial transactions).
/ fr o m o th er h ea d in g s
Financial assets at fair value through profit or loss (FVTPL) 9,080 8,597
Net exchange differences 9 27 100% of the value of Aegon’s properties, both for general account and for account of policyholders, were appraised (2018: 99%), of which 99% was performed by independent external appraisers (2018: 98%).
There are no unrecognized shares of losses in joint ventures and associates. The financial statements of the principal joint ventures and associates have the same reporting date as the Group. Refer to note 49 Group companies for a listing of the investments in joint ventures and associates and the Group’s percentage holding.
Non-current financial liabilities excluding trade payables and other provisions 709 590 439 416
Net assets of joint venture as presented above 3,602 2,848 1,237 1,057
In 2018, Goodwill and Other increased by EUR 85 million and EUR 33 million respectively following the acquisition of Robidus in September 2018. For details of the acquisition, refer to note 48 Business combinations.
Transactions in 2017: Issuance of common shares with a par value of EUR 0.12 21,099
Under the terms of the 1983 Amended Merger Agreement, dated May 2013, Vereniging Aegon has a call option relating to common shares B. Vereniging Aegon may exercise its call option at fair value of a common share B (being 1/40th of the market value of a common share in the capital of the Company at the time of issuance) to keep or restore its total stake at 32.6%, irrespective of the circumstances which cause the total shareholding to be or become lower than 32.6%. Refer to Note 50 Related party transactions for transactions between Aegon N.V. and Vereniging Aegon.
USD 190 million 1) 7.625% Semi-annually, November 15 1997 2037 n.a. 44 43 1 Issued by a subsidiary of, and guaranteed by Aegon N.V.
Non-life insurance - Unearned premiums and unexpired risks 6,002 5,341 - Incurred but not reported claims 772 820
2 The first optional redemption date is January 30, 2019; the final maturity date is January 30, 2092. Notes are fully collateralized by mortgage loans which are part of Aegon’s general account investments.
Present value of wholly unfunded obligations 1) 3,690 283 3,973 3,212 275 3,487 1 As all pension obligations are insured at subsidiary Aegon Levensverzekering almost all assets held by Aegon Nederland backing retirement benefits of
The principal actuarial assumptions have an effect on the amounts reported for the defined benefit obligation. A change as indicated in the table below in the principal actuarial assumptions of the retirement benefit plan would have the following effects per year-end: Estimated approximate effects on the defined benefit obligation
Financial actuarial assumptions 100 basis points increase in discount rate (306) (235)
All other operating segments Businesses included in all other operating segments mostly operate defined contribution plans. Please refer to note 14 Commissions and expenses for the employee expenses regarding these contribution plans.
Deferred tax assets comprise temporary differences on: 2019 2018 Real Estate (520) -
Group contributed with a capital injection in Aegon Spain to restore the Solvency II position.
It is to be noted that the difference between the amounts mentioned above for junior perpetual capital securities and perpetual cumulative subordinated bonds, and those in note 31 Other equity instruments and note 32 Subordinated borrowings, stem from valuation differences between Solvency II (market value) and IFRS-EU rules (refer to related accounting policies in note 2, paragraphs
Liabilities carried at fair value Investment contracts for account of policyholders 2) - 49,641 206 49,847
Total assets at fair value 10,077 - - 379 (37)‍ 3,509 (2,880)‍ (194)‍
Liabilities Subordinated borrowings - held at amortized cost 2,207 1,560 855 - 2,416
Private loans - held at amortized cost 4,103 - 42 4,452 4,494
Aegon’s major currencies (EUR, USD and GBP) is set at 30 years.
Reinsurance, Inc. (TRRI), an affiliated captive reinsurer, for the cash payments required fulfilling reinsurance payments to Transamerica
Aegon subsidiaries regularly receive inquiries from local regulators and policyholder advocates in various jurisdictions, including the United States, the Netherlands, Poland and the United Kingdom. In some cases, Aegon subsidiaries have modified business practices in response to inquiries or findings of inquiries. Regulators may seek fines or penalties, or changes to the way Aegon operates.
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
46 Transfers of financial assets Transfers of financial assets occur when Aegon transfers contractual rights to receive cash flows of financial assets or when Aegon retains the contractual rights to receive the cash flows of the transferred financial asset, but assumes a contractual obligation to pay the cash flows to one or more recipients in that arrangement.
 Repurchase activities; whereby Aegon receives cash for the transferred assets. The financial assets are legally (but not economically) transferred, but are not derecognized. The obligation to repay the cash received is recognized as a liability.
46.3 Assets accepted Aegon receives collateral related to securities lending, reverse repurchase activities and derivative transactions. Non-cash collateral is not recognized in the statement of financial position. To the extent that cash is paid for reverse repurchase agreements, a receivable is recognized for the corresponding amount.
Assets pledged for general account and contingent liabilities 2019 2018 General account (contingent) liabilities 2,664 4,844
Remeasurement of defined benefit plans of group companies 13 (2,397) (1,850)
The fair value of these loans amounted to EUR 1,560 million (2018: EUR 1,355 million).
What we have audited We have audited the accompanying financial statements 2019 of Aegon N.V., The Hague. The financial statements include the consolidated financial statements of the Group and the company financial statements.
The outline of our audit approach was as follows: Materiality  Overall materiality: EUR 83 million.
Our work on the liability adequacy test included assessing the reasonableness of the projected cash flows and challenging the main assumptions adopted in the context of both the Group’s and industry experience and specific product features, as well as reconciliations to supporting audit information. The quality of previous years’ assumptions is assessed by the analyses of the actual versus expected developments. Based on our procedures performed, we found that the assumptions set by management were supported by available audit information and are within a range we consider acceptable based on the Group’s and market experience. These procedures also included our evaluation of the reasonableness of management’s estimate of the valuation of mortgage loans by developing an independent range of prices and comparing management’s estimate to the independently developed ranges. Developing the independent estimate involved utilizing a range of available market inputs and assumptions and testing the completeness and accuracy of data provided by management.
Valuation of certain level 3 investments. Refer to Note 2 ‘Significant accounting policies’, Note 2.7 ‘Investments’, Note 3 ‘Critical accounting estimates and judgment in applying accounting policies’, Note 22 ‘Investments’ and Note 44 ‘Fair value’.
Based on the procedures performed as set out below, we conclude that this other information:  is consistent with the financial statements and does not contain material misstatements; and  contains the information that is required by Part 9 of Book 2 and the Sections 2:135b and 2:145 subsection 2 of the Dutch Civil Code.
As of December 31, 2019, 254 million common shares were held in the form of New York Registry shares. As of December 31, 2019, there were approximately 13,693 record holders of Aegon’s New York Registry shares resident in the United States.
th er n o n -fin an cial in fo rm atio n common shares and 566,313,695 common shares B, with a nominal value of EUR 0.12 each. The financial rights attached to a common share B were determined at 1/40th of the financial rights attached to a common share.
Aegon in Mexico Aegon has a joint venture in Mexico with Administradora Akaan S.A. de C.V., called Akaan-Aegon S.A.P.I. de C.V. The Mexico City-based operating company, Akaan Transamerica, launched a series of mutual funds and investment solutions in October 2017, supporting family offices, high-net-worth individuals, and institutions. In 2019, Transamerica made the strategic decision to wind down this joint venture, as the business had not performed according to expectations. The wind down of the joint venture is expected to be completed in 2020.
Agency Network (TAN) and Transamerica Financial Advisors, Inc. (TFA). TFN, through licensed agents and registered representatives/
1 Aegon USA’s life insurance company in New York, Transamerica Financial Life Insurance Company, is regulated by the New York Department of Financial Services.
Information Security and Privacy Regulation Transamerica’s businesses are regulated with respect to information security, data breach response, privacy and data use at both the federal and state levels. At the federal level various Transamerica companies are subject to the Gramm-Leach-Bliley Act (GLBA), the Fair Credit Reporting Act (FCRA), and the Health Insurance Portability and Accountability Act (HIPAA), among other laws.
In recent years, Aegon the Netherlands has invested heavily in its direct online channel to achieve an enhanced digital self-service experience. Distribution channels such as online and the contact centers generate leads for Aegon Advies B.V..
Pursuant to the SRM Regulation and the Banking Recovery and Resolution Directive, Aegon Bank N.V. is at all times required to meet a minimum amount of own funds and eligible liabilities (MREL), expressed as a percentage of the total liabilities and own funds.
At the heart of this is Aegon UK’s employee digital portal, which provides tools to enable them to make better informed decisions.
Financial supervision of insurance companies The European Union Insurance Directives referred to collectively as Solvency II are incorporated into UK law. The Solvency II directives came into effect on January 1, 2016. The directives are based on the 'home country control' principle, i.e. an insurance company with a license issued by the regulatory authorities in its home country is allowed to conduct business in any country of the European
Overview of Southern and Eastern Europe At the start of 2019, Aegon had operations in the Southern and Eastern European (SEE) countries of the Czech Republic, Hungary,
Aegon first entered the Spanish insurance market in 1980. This was followed in 1992 by the purchase of a majority stake in Hungary’s former state-owned insurance company, Állami Biztosító. To strengthen its presence, Aegon further expanded in Central &
Central and Eastern Europe Aegon Hungary Insurance is a composite insurance entity and owns several subsidiaries that also operate in the financial services sector. The Hungarian group's products are therefore marketed via a broad range of channels, the most important of which are tied agents and insurance brokers, in addition to bank partners, call centers, key account managers and its online channel.
As of December 31, 2019, Aegon managed the savings of approximately 3.0 million pension fund members in Southern and
On May 17, 2019 Aegon announced an agreement to sell its 50% stake in the variable annuity joint ventures in Japan. The cash proceeds amounted to EUR 153 million. The transaction agreements were signed on June 28, 2019. The divestment was completed early 2020.
th er n o n -fin an cial in fo rm atio n loans and alternatives. In the United States and the United Kingdom, a significant element of Affiliate Sales is conducted on an open architecture basis.
Credit risk is the risk of loss resulting from the default by, or failure to meet contractual obligations of, issuers and counterparties.
Additionally, Aegon is indirectly exposed to credit risk on the investment portfolios underlying separate account liabilities. Changes to credit risk can result in separate account losses, which increase the probability of future loss events. In the United States and the Netherlands separate account products can include guarantees which protect policyholders against some or all of the downside risks in their separate account portfolio. Reduced separate account values also decrease fee income and may accelerate deferred policy acquisition costs (DPAC) amortization. Reconsideration of assumptions might also affect the DPAC amortization schedule. These factors may have a material adverse effect on Aegon’s results of operations and financial position.
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, as well as certain limited cases of unauthorized internal user activity, including activity between different Aegon country units. Although to Aegon’s knowledge these events have thus far not been material in nature, Aegon management recognizes the need 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 data privacy risks.
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.
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 in the jurisdictions in which Aegon does business, including the United States, the Netherlands, and the United Kingdom. These actions may involve issues including, but not limited to, employment or distribution relationships; operational and internal controls and processes; investment returns; sales practices; transparency and adequacy of product disclosures including regarding initial costs, ongoing costs, and costs due on policy surrender as well as changes to costs over time; environmental and climate change related matters; competition and antitrust matters; data privacy; information security; intellectual property; and anti-money laundering, anti- bribery and economic sanctions compliance.
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. Aegon also decided to reduce future policy costs for the large majority of its unit-linked portfolio. Some of the unit linked products are still involved in ongoing litigation.
In the Netherlands Aegon is also involved in claims for compensation and the cancellation or nullification of contracts concerning the Vliegwiel product, a variation on securities leasing products (without a built-in guarantee) of which a total of 63,000 contracts have been offered by an Aegon subsidiary in the Netherlands in the period between 1997 and 2002. All Vliegwiel contracts have expired.
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 Dutch dividend withholding tax purposes.
US withholding and information reporting Backup withholding and information reporting requirements may apply to certain payments on the common shares and to proceeds of a sale or redemption of the common shares to US holders made within the United States. Aegon, its agent, a broker, or any paying agent, as the case may be, may be required to withhold tax from any payment that is subject to backup withholding if a US holder fails to furnish the US holder's taxpayer identification number, fails to certify that such US holder is not subject to backup withholding, or fails to otherwise comply with the applicable requirements of the backup withholding rules. Certain US holders are not subject to the backup withholding and information reporting requirements.
The following table presents the aggregate fees for services rendered by PwC in 2019, 2018 and 2017.
(customers, employees, business partners, investors and wider community). Some figures may not add due to rounding. Year-onyear changes have been calculated using pre-rounded numbers.
NM – not measured pp - percentage points 1 2018 and 2017 numbers have been restated following a recalculation of the number of customers at Aegon UK. The total number of customers for 2018 was originally reported as 28.5 million and for 2017 28.1 million.
Dividend payments1) EUR 611 million EUR 570 million 7.2% EUR 439 million
Risk Management team used this as a test case to analyze and quantify the potential impact on our mortgage portfolio.
This year Aegon calculated the footprint of its residential mortgage portfolio based on energy labels from Rijksdienst voor Ondernemed Nederland (RVO) and average residential energy consumption. As of the end of December 2019, the total footprint was estimated as 582,000 tCO
Through our products we offer financial solutions for vulnerable groups in, for example, Brazil, Romania and China. From an investment perspective, ESG integration and active ownership are principles we follow across all decisions and portfolios. Aegon Asset Management is a signatory to the Principles for Responsible Investment.
Our responsible investment framework encourages engagement with companies in an effort to advocate for positive change, mitigate ESG risk and promote best practices. Through our procurement, we currently have over 650 suppliers who are subject to our minimum supplier standards and who have agreed to our Supplier Sustainability Declaration – a statement of the supplier’s sustainability policies and initiatives that our partners attest to either during or after the procurement process.
Aegon has a dedicated Global Government & Public Affairs department, whose aim is to support regulators and lawmakers. We advocate worldwide for people to have access to insurance and financial services, for people to be aware of opportunities for flexible employment in old age and for governments to plan and provide for their citizens in an age of increasing longevity. Aegon also encourages financial literacy around the world and engages with individuals and policymakers in service of helping people to achieve wealth and health wherever we can. This includes partnerships with the World Economic Forum, the American Association of Retired Persons, the Milken Institute the Global Coalition on Aging and the Organization for Economic Co-operation and Development
Gender equality Achieve gender equality and empower all women and girls
Responsible Investment Policy draws heavily on, amongst others, the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises. The Policy is instrumental to Aegon’s investment practices as are executed by Aegon Asset Management; the group’s global asset manager responsible for managing most of Aegon’s investments. For further details on Aegon’s approach to responsible investment, please see page 28.
Bifurcation is the measurement and presentation of embedded derivatives separate from the host contracts, as if they were stand-alone derivative financial instruments.
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
Defined benefit obligation relate to the accounting for postemployment benefit plans. It is the present value, without deducting any plan assets, of expected future payments required to settle the obligation resulting from employee service in the current and prior periods.
Government exposures relates to government issued securities including Dutch Government bonds and US Treasury, agency and state bonds.
Loss absorbing capacity of deferred taxes (LAC-DT)‍ is a loss compensating effect of taxes taken into account in the solvency capital requirement.
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, could, 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.