2014 Annual General Meeting (AGM) Presentation

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  • The Hague, May 21, 2014

    Annual General Meeting of Shareholders Aegon N.V.

    Jaarlijkse Algemene Vergadering van Aandeelhouders Aegon N.V.

  • 2

    Welcome to the Annual General Meeting of Shareholders

    Welkom op de jaarlijkse Algemene Vergadering van Aandeelhouders

    In order to hear a simultaneous translation into English, please choose channel 2

    Voor het beluisteren van een simultaanvertaling in het

    Nederlands kiest u kanaal 1

  • 3

    Rob Routs

    Chairman Supervisory Board

    Voorzitter Raad van Commissarissen

  • 4

    Opening

    Agenda item 1 / Agendapunt 1

  • 5

    Presentation on the course of business in 2013

    Presentatie over de gang van zaken in 2013

    Agenda item 2 / Agendapunt 2

  • Executing on our strategy

    Alex Wynaendts, CEO & Chairman of the Executive Board

    The Hague, May 21, 2014

  • 7

    Focus on executing our strategy is delivering clear results

    2013 Strong performance Higher underlying earnings Strong capital position and ratings Increased dividend

    Executing on strategic transformation Getting closer to our customers Expanded digital capabilities Enhanced distribution

  • 8

    AA- financial

    strength rating

    EUR 1.9

    billion

    Strong underlying earnings before tax

    0

    140

    340

    2011 2012 2013

    More cash allocated to dividends (EUR millions)

    Strong excess capital position

    EUR 2.2

    billion

    Solvency ratio: 212%

    All numbers on this slide refer to full year 2013 or end-year 2013 data

  • 9

    Aegons purpose is to help people take responsibility for their financial future

    across their life cycle

  • 10

    Building trust and creating benefits in 2013

    Paid out 20 billion in claims and benefits to our customers

    Impact investments of

    3 billion

    Invested 6.3 million in local communities

    around the world

  • 11

    Global trends support Aegons businesses

    Aging leads to significant demand for our products globally

    Source: Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat

    68.6 79.6

    51

    75.1

    71.9 81.7

    44.6

    76

    69.4 83.1

    1950

    2015

    Life expectancy at birth in 1950 and in 2015 (in years; overall: male + female)

  • 12

    Executing on our strategic objectives

  • 13

    Optimize portfolio Successful repositioning of Spanish business

    * Depending on the performance of the partnership, after 5 years an additional amount may be paid

    Divestiture of existing joint ventures Strategic partnership with Spains largest financial group

    Spanish divestments generated over EUR 1 billion

    Continued partnership with Liberbank

  • 14

    Operational excellence Disciplined focus on cost efficiency supports strategic investments

    Cost reductions allow for increased investments without materially increasing total expenses

    Cost reduction programs

    Consolidation from 13 to 3 divisions in the Americas

    Shared service center in the Americas for additional efficiencies

    Completed two-year cost reduction program in NL

    Extensive transformation program in UK

    Restructuring and deleveraging at holding

    Strategic investments to respond to our customers changing needs

    Technology continues to change customer

    behavior

    Committed to providing products and services customers need

    Customers seek different distribution channels New online channels to engage customers Redesigned intermediary capability

  • 15

    Loyal customers Technology continues to change customer behavior

  • 16

    Loyal customers Customers are more willing to go online

  • 17 17

    Loyal customers Extension of successful UK platform with direct-to-consumer proposition

  • 18

    Loyal customers Customers are seeking a wider range of distribution channels

    Spain Turkey

    India Brazil

  • 19

    64 67

    70

    2011 2013 2014

    Empower employees

    Employee engagement and customer commitment closely linked

    63 67

    69

    2011 2013 2014

    Engagement Enablement High performing norm 2014

    Financial services norm 2014

    73

    64

    70

    65

    NB: Both graphs refer to Aegons overall 2014 Global Employee Survey results

  • 20

    Sustainability is at the heart of our strategy

    Capital Talent Expertise Trust Benefits Profits Society

    Pricing and product development policy puts customer first

    Dow Jones Sustainability Index (DJSI) performance confirms our actions

    Aegon ranked Silver Class in the DJSI just behind the sector leader

    Various key policies established

    Volunteer hours for employees Sustainable procurement policy Health and safety statement

  • 21

    2014

    Further executing on our strategy

    Aegon well positioned to capture

    opportunities

    Looking ahead

  • 22

    Presentation on the course of business in 2013

    Presentatie over de gang van zaken in 2013

    Agenda item 2 / Agendapunt 2

  • 23

    Annual Report 2013

    Jaarverslag 2013

    Agenda item 3.1 / Agendapunt 3.1

  • Financial strategy supports strategic transformation

    Darryl Button, CFO & Member of the Executive Board

    The Hague, May 21, 2014

  • 25

    Aegon performed strongly in 2013

    1,544 1,851 1,945

    2011 2012 2013

    887 1,582

    849

    2011 2012 2013

    2011 2012 2013

    3,420 3,177 3,328

    2011 2012 2013

    * Total sales consist of new life sales, new premiums accident & health, general insurance and 1/10 of gross deposits

    Underlying earnings before tax (As reported; EUR million)

    Sales MCVNB

    Net income (EUR million)

    Operating expenses (EUR million)

    Sales* and MCVNB (As reported; EUR million)

    5,701 6,725 7,151

    422

    986

    Adjusted expense levels

  • 26

    Earnings up 5% Continued business growth Higher equity markets Partly offset by weaker US dollar

    Lower net income

    Positive: Higher gains on investments Lower impairments Lower tax charges

    Negative: Losses on equity hedges in place

    to protect capital position Losses due to adjustments in

    market assumptions

    Increased underlying earnings not reflected in net income due to hedging costs

    1,544 1,851 1,945

    2011 2012 2013

    887 1,582

    849

    2011 2012 2013

    Underlying earnings before tax (As reported; EUR million)

    Net income (EUR million)

  • 27

    Strong capital position and cash flows

    1.2 1.6

    1.3

    2011 2012 2013

    6.7 7.4 7.4

    2011 2012 2013

    1.2 2.0 2.2

    2011 2012 2013

    195% 228% 212%

    2011 2012 2013

    Operational free cash flows (Excl. market impacts; EUR million)

    Return on equity

    Solvency ratio (Insurance Group Directive, IGD)

    Excess capital at the holding (EUR billion)

  • 28

    Local balance sheets well capitalized

    Target

    Buffer

    US UK NL

    Floor

    New capital management framework implemented in 2013

    US and the Netherlands strongly capitalized and paying dividends

    to the holding

    UK capital position significantly improved after GBP 300 million

    contribution from the holding

    Capital levels (End of 2013)

  • 29

    2013 operational free cash flows in target range of EUR 1.3 - 1.6 billion

    Operational free cash flows paid out as dividend to the holding

    Americas and the Netherlands expected to remain stable; UK cash flows to increase New Markets contributing to increasing operational free cash flow going forward

    Operational free cash flows: dividends to holding & strengthening of local capital

    2013 Americas 0.8 Netherlands 0.3 United Kingdom 0.1 New Markets 0.1 Total normalized operational free cash flow 1.3 Market impacts & one-time items 0.2 Operational free cash flow 1.5

    2013 Americas 0.9 Netherlands 0.5 United Kingdom 0.0 New Markets 0.1 Dividend paid by units 1.5

    Strong cash flows at the units (EUR billion)

    translate into dividends to the holding (EUR billion)

  • 30

    How excess capital was put to use

    Excess capital in 2013 (EUR billion)

    2.0 1.5 0.6 (0.5) (0.4) (0.4) (0.4) 2.2

    Excess capital January 1, 2013

    Net dividends received from business units

    Acquisitions & divestments

    Investments in business units

    Common & preferred dividends

    Cancellation of preferred

    shares

    Funding & operating expenses

    Excess capital December 31,

    2013

  • 31

    Capital management results in Lower funding costs Improving cash flows Increasing return on equity

    Leverage ratio and fixed charge coverage on track to reach 2014 objectives

    Active capital management improves financial flexibility

    8.7

    ~6.8

    34.4%

    ~30.0%

    Q1 13 Q4 13 Q1 14 2014 target

    * Interest expense on f inancial leverage and preferred dividends; 2013 restated to reflected earnings impact of DAC and longevity accounting changes ** Gross leverage ratio reflects shareholders equity adjusted for DAC and longevity accou