Course of business and significant events in 2008 Alex Wynaendts, - - PowerPoint PPT Presentation

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Course of business and significant events in 2008 Alex Wynaendts, - - PowerPoint PPT Presentation

Nov 15, 2022 33 likes •154 views

Course of business and significant events in 2008 Alex Wynaendts, CEO & Chairman of the Executive Board Local knowledge. Global power. 1 Strategy update June 2008 Strategic priorities to improve performance Reallocate capital towards

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Local knowledge. Global power. 1

Course of business and significant events in 2008

Alex Wynaendts, CEO & Chairman of the Executive Board

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Local knowledge. Global power. 2

3 1

Strategy update June 2008

2

Reallocate capital towards businesses with higher growth and return prospects Improve growth and returns from existing businesses Manage AEGON as an international group

Strategic priorities to improve performance

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Local knowledge. Global power. 3

Refocus towards businesses with higher growth and return prospects

* New markets = Central & Eastern Europe, Asia and Latin America

40-50% 60%

2007 2008 Target allocation 2012 New markets* Western Europe US 15-25% 40-50% 25-35% 10% 60% 30% Global businesses 5-10% 10% 55% 35%

Capital allocation

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Local knowledge. Global power. 4

Global financial turmoil affected the economy

GDP growth expectations for 20091 (EUR million)

  • 3.0%
  • 1.0%

1.0% Jun 08 Jul 08 Aug 08 Sep 08 Oct 08 Nov 08 Dec 08 Jan 09 Feb 09 US Euro zone UK

100 150 200 250 300 350 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2009

Total US credit market debt/GDP3 (%)

  • 1. Source: Consensus Economics Inc. 2008
  • 2. Bloomberg
  • 3. Total US credit market debt measured by the US Federal Reserve includes debt owed by domestic financial services firms, mortgages, corporate debt, federal

government debt, small business debt, consumer debt, state and local government debt, and foreign debt

Credit spread gapping2

Average corporate bond yields (%)

2.0 4.0 6.0 8.0 Dec/02 Dec/03 Dec/04 Dec/05 Dec/06 Dec/07 Dec/08

10 Y Treasury AAA AA BBB

Equity markets2

40 60 80 100 120 140 160 180 2003 2004 2005 2006 2007 2008 2009 AEX (Amsterdam) S&P 500 FTSE 100

Indexed level (December 31, 2002=100)

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Local knowledge. Global power. 5

Maintaining strong capital buffer remains key

Strong capital buffer required

  • Demand for

guarantees

  • Trust

Customers Regulators

  • Focus on capital
  • Take a more

conservative stance Fungibility of capital restricted

Financial markets

  • Volatility
  • Illiquidity
  • Closed capital

markets Increased cost of capital & less availability of capital Increase of required capital

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Local knowledge. Global power. 6

Execution of strategy under difficult circumstances CAPITAL CONTINGENCY COST FOCUS BUSINESS REVIEW

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Local knowledge. Global power. 7

Capital: EUR 1.7 billion of capital released in 2008

  • Active risk reduction and

diversification: – Investment risks – Optimization of asset and liability management – Securitization – Reinsurance transactions

  • Transferring risk through reinsurance
  • ViF securitization
  • Further improvements ALM
  • Sale of risky investments
  • Reinsurance of non-life catastrophic

risk Americas United Kingdom Netherlands Other countries

EUR 1.7 billion of capital released in 2008 through capital preservation and de-risking measures

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Local knowledge. Global power. 8

Americas United Kingdom Netherlands Other countries

  • Salary freeze
  • Staff reductions / deferred hiring:

headcount reduction of ~560

  • Additional savings at various divisions

Cost: planned cost measures of EUR 150 million in 2009

  • Return to 2007 cost base
  • Restructuring program in the

distribution business

  • Reduction in number of contract

services

  • Limited salary increases
  • Operational changes to sourcing and IT
  • Reorganization marketing and customer

services

  • Headcount reduction of ~110
  • Limited salary increases
  • Savings in distribution
  • Cost containment but room for

growth

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Local knowledge. Global power. 9

~89% of common shares ~11% of common shares 100% of preferred shares

Contingency: EUR 3 billion additional core capital structure

AEGON N.V.

Public Market Dutch State Vereniging AEGON

Capital facility EUR 3 billion Non-voting securities EUR 3 billion

EUR EUR

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Local knowledge. Global power. 10

  • Dutch State representation on AEGON Supervisory Board
  • Two seats granted
  • Formal appointment by Annual General Meeting of Shareholders
  • Membership of Audit, Compensation and Nominating Committees
  • State representatives approval required on certain decisions
  • AEGON maintains full discretion to determine dividend on common shares

Contingency: EUR 3 billion additional core capital structure

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Local knowledge. Global power. 11

Business review: continuous assessment of business mix

Measures taken in line with long term strategy

  • Sale of real estate brokerage
  • Sale of AEGON Taiwan Life

Insurance US Netherlands Other countries

  • New organizational structure
  • Downsizing of institutional spread

based balances in the US

  • Closing down of car credit insurance
  • Merger of broker-dealers
  • Strategic refocus of Canadian

business Canada

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Local knowledge. Global power. 12

Despite market turmoil continued focus on execution of strategy

  • Enhanced position in pension markets Hungary and Poland
  • First step in fast-developing Turkish life insurance and pension market
  • Expanded footprint in Latin America with Brazilian life insurance joint

venture

  • Presence in Spanish bank distribution channel extended
  • Continued roll-out across highly developed coastal provinces and new

asset management joint venture in China

  • Launch of India life insurance and pension business