6-K 1 d943301d6k.htm 6-K 6-K
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Securities and Exchange Commission

Washington, D.C. 20549

 

 

Form 6-K

 

 

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d/16

of the Securities Exchange Act of 1934

August 2019

 

AEGON N.V.

 

Aegonplein 50

2591 TV THE HAGUE

The Netherlands


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Aegon’s condensed consolidated interim financial statements 1H 2019, dated August 13, 2020, are included as appendix and incorporated herein by reference.

 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

   

AEGON N.V.

 

   

 

   

 

(Registrant)

Date: August 13, 2020     By  

/s/ J.H.P.M. van Rossum

      J.H.P.M. van Rossum
      Executive Vice President and Head of Corporate Financial Center


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Condensed consolidated interim financial statements 1H 2020 Results Helping people achieve a lifetime of financial security The Hague, August 13, 2020


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Condensed consolidated interim financial statements 1H 2020 Results

 

    

 

 

 

 

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Condensed consolidated interim financial statements 1H 2020 Results

 

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Condensed consolidated income statement

     2  

Condensed consolidated statement of comprehensive income

     3  

Condensed consolidated statement of financial position

     4  

Condensed consolidated statement of changes in equity

     5  

Condensed consolidated cash flow statement

     6  

Notes to the Condensed consolidated interim financial statements

     7  

 

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Condensed consolidated interim financial statements 1H 2020 Results

 

Condensed consolidated income statement

 

 

EUR millions

     Notes       
  First half
2020
 
 
    

  First half

2019 

 

1  

   

Premium income

     4        8,744         9,276   

Investment income

     5        4,034         4,083   

Fee and commission income

        1,170         1,213   

Other revenues

                      

Total revenues

        13,951         14,575   

Income from reinsurance ceded

        1,952         1,844   

Results from financial transactions

     6        (4,685)        24,237   

Other income

              55         78   

Total income

        11,273         40,733   
   

Benefits and expenses

     7        10,700         39,701   

Impairment charges / (reversals)

     8        246         153   

Interest charges and related fees

        233         243   

Other charges

     9        101         (4)  

Total charges

        11,280         40,094   
   

Share in profit / (loss) of joint ventures

        115         106   

Share in profit / (loss) of associates

                      

Income / (loss) before tax

        111         749   

Income tax (expense) / benefit

     10        92         (133)  

Net income / (loss)

              202         617   
   

Net income / (loss) attributable to:

          

Owners of Aegon N.V.

        202         616   

Non-controlling interests

                      
   

Earnings per share (EUR per share)

     14                

Basic earnings per common share

        0.08         0.28   

Basic earnings per common share B

               0.01   

Diluted earnings per common share

        0.08         0.28   

Diluted earnings per common share B

                     0.01   

1 Amounts have been restated to reflect the voluntary change in accounting policy related to the deferred cost of reinsurance adopted by Aegon effective January 1, 2020. Refer to note 2.3. Voluntary change in accounting policy for details about this change.

 

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Condensed consolidated interim financial statements 1H 2020 Results

 

Condensed consolidated statement of comprehensive income

 

EUR millions      First half
2020
    

  First half

2019 1

   

Net income / (loss)

     202       617 
   

Other comprehensive income:

       

Items that will not be reclassified to profit or loss:

       

Changes in revaluation reserve real estate held for own use

     (1)      (6)

Remeasurements of defined benefit plans

     (48)      (418)

Income tax relating to items that will not be reclassified

          82 
   

Items that may be reclassified subsequently to profit or loss:

       

Gains / (losses) on revaluation of available-for-sale investments

     1,468       2,596 

Gains / (losses) transferred to the income statement on disposal and impairment of available-for-sale investments

     110       (256)

Changes in cash flow hedging reserve

     302       77 

Movement in foreign currency translation and net foreign investment hedging reserve

     (167)      39 

Equity movements of joint ventures

         

Equity movements of associates

         

Disposal of group assets

     (10)      (1)

Income tax relating to items that may be reclassified

     (406)      (519)

Other

         

Total other comprehensive income / (loss) for the period

     1,273       1,613 

Total comprehensive income / (loss)

     1,476       2,229 
   

Total comprehensive income / (loss) attributable to:

       

Owners of Aegon N.V.

     1,473       2,229 

Non-controlling interests

         

1 Amounts have been restated to reflect the voluntary change in accounting policy related to the deferred cost of reinsurance adopted by Aegon effective January 1, 2020. Refer to note 2.3. Voluntary change in accounting policy for details about this change.

 

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Condensed consolidated interim financial statements 1H 2020 Results

 

Condensed consolidated statement of financial position

             

Jun. 30,

2020

    

Dec. 31,

2019 1

EUR millions

     Notes                
   

Assets

          

Cash and cash equivalents

        11,138       12,263 

Investments

     11        159,530       146,750 

Investments for account of policyholders

     12        212,926       226,374 

Derivatives

        17,663       11,157 

Investments in joint ventures

        1,989       1,983 

Investments in associates

        336       363 

Reinsurance assets

        20,455       20,253 

Deferred expenses

        10,298       10,806 

Other assets and receivables

        8,760       9,036 

Intangible assets

              1,504       1,559 

Total assets

        444,598       440,543 
   

Equity and liabilities

          

Shareholders’ equity

        23,914       22,449 

Other equity instruments

              2,557       2,571 

Issued capital and reserves attributable to owners of Aegon N.V.

        26,472       25,020 

Non-controlling interests

              22       20 

Group equity

        26,494       25,040 
   

Subordinated borrowings

        2,208       2,207 

Trust pass-through securities

        141       136 

Insurance contracts

     15        127,552       122,885 

Insurance contracts for account of policyholders

     16        128,999       135,710 

Investment contracts

        19,718       18,594 

Investment contracts for account of policyholders

     17        86,950       93,826 

Derivatives

        17,975       11,616 

Borrowings

     18        8,891       9,307 

Other liabilities

              25,670       21,223 

Total liabilities

    

              418,104       415,503 

Total equity and liabilities

              444,598       440,543 

1 Amounts have been restated to reflect the voluntary change in accounting policy related to the deferred cost of reinsurance adopted by Aegon effective January 1, 2020. Refer to note 2.3. Voluntary change in accounting policy for details about this change.

 

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Condensed consolidated interim financial statements 1H 2020 Results

 

Condensed consolidated statement of changes in equity

 

 
EUR millions   Share
capital 1
    Retained
earnings
    Revaluation
reserves
 

  Remeasurement
of defined

benefit plans

  Other
  reserves
  Other equity
  instruments
  Issued
  capital and
reserves 2
  Non-
  controlling
interests
          Total  
       

Six months ended June 30, 2020

                       
       

At beginning of year

    7,536       10,994       5,868       (2,397     456       2,571       25,028       20       25,048  

Voluntary change in accounting policy 3

    -       (12     5       -       (1     -       (8     -       (8

Adjusted balance at beginning of year

    7,536       10,981       5,873       (2,397     456       2,571       25,020       20       25,040  
       

Net income / (loss) recognized in the income statement

    -       202       -       -       -       -       202       1       202  
       

Other comprehensive income:

                       

Items that will not be reclassified to profit or loss:

                       

Changes in revaluation reserve real estate held for own use

    -       -       (1     -       -       -       (1     -       (1

Remeasurements of defined benefit plans

    -       -       -       (48     -       -       (48     -       (48

Income tax relating to items that will not be reclassified

    -       -       -       8       -       -       8       -       8  
       

Items that may be reclassified subsequently to profit or loss:

                       

Gains / (losses) on revaluation of available-for-sale investments

    -       -       1,468       -       -       -       1,468       -       1,468  

Gains / (losses) transferred to income statement on disposal and impairment of available-for-sale investments

    -       -       110       -       -       -       110       -       110  

Changes in cash flow hedging reserve

    -       -       302       -       -       -       302       -       302  

Movement in foreign currency translation and net foreign investment hedging reserves

    -       -       (49     19       (137     -       (167     -       (167

Equity movements of joint ventures

    -       -       -       -       8       -       8       -       8  

Equity movements of associates

    -       -       -       -       7       -       7       -       7  

Disposal of group assets

    -       -       -       -       (10     -       (10     -       (10

Income tax relating to items that may be reclassified

    -       -       (401     -       (4     -       (406     -       (406

Other

    -       1       -       -       -       -       1       1       3  

Total other comprehensive income

    

    -       1       1,429       (22     (136     -       1,272       1       1,273  

Total comprehensive income / (loss) for 2020

    -       203       1,429       (22     (136     -       1,473       2       1,476  
       

Issuance and purchase of (treasury) shares

    -       9       -       -       -       -       9       -       9  

Coupons on perpetual securities

    -       (28     -       -       -       -       (28     -       (28

Incentive plans

    -       11       -       -       -       (14     (3     -       (3

At end of period

    7,536       11,176       7,302       (2,419     319       2,557       26,472       22       26,494  
       

Six months ended June 30, 2019

                       
       

At beginning of year

    7,808       9,975       3,436       (1,850     149       3,320       22,838       22       22,860  

Voluntary change in accounting policy 3

    -       (9     (1     -       -       -       (10     -       (10

Change in accounting policies relating to new effective standards

    -       (44     -       -       -       -       (44     -       (44

Adjusted balance at beginning of year

    7,808       9,922       3,435       (1,850     149       3,320       22,784       22       22,805  
       

Net income / (loss) recognized in the income statement

    -       616       -       -       -       -       616       -       617  
       

Other comprehensive income:

                       

Items that will not be reclassified to profit or loss:

                       

Changes in revaluation reserve real estate held for own use

    -       14       (20     -       -       -       (6     -       (6

Remeasurements of defined benefit plans

    -       -       -       (418     -       -       (418     -       (418

Income tax relating to items that will not be reclassified

    -       -       1       80       -       -       82       -       82  
       

Items that may be reclassified subsequently to profit or loss:

                       

Gains / (losses) on revaluation of available-for-sale investments

    -       -       2,596       -       -       -       2,596       -       2,596  

Gains / (losses) transferred to income statement on disposal and impairment of available-for-sale investments

    -       -       (256     -       -       -       (256     -       (256

Changes in cash flow hedging reserve

    -       -       77       -       -       -       77       -       77  

Movement in foreign currency translation and net foreign investment hedging reserves

    -       -       (10     (2     51       -       39       -       39  

Equity movements of joint ventures

    -       -       -       -       7       -       7       -       7  

Equity movements of associates

    -       -       -       -       4       -       4       -       4  

Disposal of group assets

    -       -       -       -       (1     -       (1     -       (1

Income tax relating to items that may be reclassified

    -       -       (514     -       (5     -       (519     -       (519

Other

    -       9       -       -       -       -       9       -       9  

Total other comprehensive income

    

    -       24       1,873       (341     57       -       1,613       -       1,613  

Total comprehensive income / (loss) for 2019

    -       640       1,873       (341     57       -       2,229       -       2,229  
       

Issuance and purchase of (treasury) shares

    -       155       -       -       -       -       155       -       155  

Other equity instruments redeemed

    -       (16     -       -       -       (424     (440     -       (440

Dividends paid on common shares

    (139     (170     -       -       -       -       (309     -       (309

Issuance of non-cumulative subordinated loans

    -       (4     -       -       -       500       496       -       496  

Coupons on non-cumulative subordinated notes

    -       -       -       -       -       -       -       -       -  

Coupons on perpetual securities

    -       (48     -       -       -       -       (48     -       (48

Incentive plans

    -       2       -       -       -       (13     (11     -       (11

At end of period

    7,669       10,481       5,308       (2,191     205       3,384       24,856       22       24,878  

1 For a breakdown of share capital please refer to note 14.

2 Issued capital and reserves attributable to owners of Aegon N.V.

3 Amounts have been restated to reflect the voluntary change in accounting policy related to the deferred cost of reinsurance adopted by Aegon effective January 1, 2020. Refer to note 2.3. Voluntary change in accounting policy for details about this change.

 

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Condensed consolidated interim financial statements 1H 2020 Results

 

Condensed consolidated cash flow statement

 

 
EUR millions     First half
2020
        First half
2019
 
     

Income / (loss) before tax

    111       749  

Results from financial transactions

    4,944       (24,510

Amortization and depreciation

    268       491  

Impairment losses

    242       143  

Income from joint ventures

    (115     (106

Income from associates

    (3     (4

Release of cash flow hedging reserve

    (59     (53

Other

    (81     (13

Adjustments of non-cash items

    5,197       (24,052

Insurance and investment liabilities

    4,543       3,326  

Insurance and investment liabilities for account of policyholders

    (9,550     18,656  

Accrued expenses and other liabilities

    43       103  

Accrued income and prepayments

    (794     (394

Changes in accruals

    (5,758     21,691  

Purchase of investments (other than money market investments)

    (22,569     (18,686

Purchase of derivatives

    479       (467

Disposal of investments (other than money market investments)

    14,707       20,418  

Disposal of derivatives

    2,125       1,107  

Net purchase of investments for account of policyholders

    2,461       3,386  

Net change in cash collateral

    4,840       2,523  

Net purchase of money market investments

    (2,340     (656

Cash flow movements on operating items not reflected in income

    (297     7,625  

Tax paid

    (53     (47

Other

    8       (4

Net cash flows from operating activities

    (793     5,962  

Purchase of individual intangible assets (other than VOBA and future servicing rights)

    (17     (16

Purchase of equipment and real estate for own use

    (27     (45

Acquisition of subsidiaries, net of cash

    (14     (1

Acquisition joint ventures and associates

    (20     (51

Disposal of individual intangible assets (other than VOBA and future servicing rights)

    1       -  

Disposal of equipment

    1       39  

Disposal of subsidiaries, net of cash

    -       137  

Disposal joint ventures and associates

    157       1  

Dividend received from joint ventures and associates

    20       24  

Net cash flows from investing activities

    101       87  
     

Issuance of perpetuals

    -       496  

Issuance of treasury shares

    20       -  

Proceeds from TRUPS1, subordinated loans and borrowings

    2,434       3,751  

Repayment of perpetuals

    -       (440

Repayment of TRUPS1, subordinated loans and borrowings

    (2,791     (6,357

Dividends paid

    -       (170

Coupons on perpetual securities

    (33     (64

Payment of principal portion of lease liability

    (32     (26

Net cash flows from financing activities

    

    (401     (2,808

Net increase / (decrease) in cash and cash equivalents 2

    (1,093     3,241  
     

Net cash and cash equivalents at the beginning of the reporting period

    12,263       8,744  

Effects of changes in exchange rate

    (32     (1

Net cash and cash equivalents at the end of the reporting period

    11,138       11,984  

1 Trust pass-through securities.

2 Included in net increase / (decrease) in cash and cash equivalents are: interest received (2020: EUR 2,509 million, 2019: EUR 2,983 million), dividends received (2020: EUR 1,187 million, 2019: EUR 1,067 million), interest paid (2020: EUR 190 million, 2019: EUR 137 million) of which payment of the interest portion of the lease liability (2020: EUR 5 million, 2019: EUR 5 million).

 

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Condensed consolidated interim financial statements 1H 2020 Results

 

Notes to the Condensed consolidated interim financial statements

Amounts in EUR millions, unless otherwise stated

Aegon N.V., incorporated and domiciled in the Netherlands, is a public limited liability company organized under Dutch law and recorded in the Commercial Register of The Hague under number 27076669 and with its registered address at Aegonplein 50, 2591 TV, The Hague, the Netherlands. Aegon N.V. serves as the holding company for the Aegon Group and has listings of its common shares in Amsterdam and New York.

Aegon N.V. (or ‘the Company’) and its subsidiaries (collectively, ‘Aegon’ or ‘the Group’) have life insurance and pensions operations in more than 20 countries in the Americas, Europe and Asia and are also active in savings and asset management operations, accident and health insurance, general insurance and - to a limited extent - banking operations. Headquarters are located in The Hague, the Netherlands. The Group employs almost 24,000 people worldwide.

1. Basis of presentation

The condensed consolidated interim financial statements as at, and for the six-month period ended, June 30, 2020 (first half 2020), have been prepared in accordance with IAS 34 ‘Interim Financial Reporting’, as adopted by the European Union (hereafter ‘IFRS-EU’). They do not include all of the information required for a full set of financial statements prepared in accordance with IFRS-EU and should therefore be read together with the 2019 consolidated financial statements of Aegon N.V. as included in Aegon’s Integrated Annual Report for 2019. Aegon’s Integrated Annual Report for 2019 is available on its website (aegon.com).

The condensed consolidated interim financial statements have been prepared in accordance with the historical cost convention as modified by the revaluation of investment properties and those financial instruments (including derivatives) and financial liabilities that have been measured at fair value. The condensed consolidated interim financial statements as at, and for the six-month period ended, June 30, 2020, were approved by the Supervisory Board on August 12, 2020.

The condensed consolidated interim financial statements are presented in euro (EUR) and all values are rounded to the nearest million unless otherwise stated. The consequence is that the rounded amounts may not add up to the rounded total in all cases.

The published figures in these condensed consolidated interim financial statements are unaudited.

2. Significant accounting policies

All accounting policies and methods of computation applied in the condensed consolidated interim financial statements are the same as those applied in the 2019 consolidated financial statements, except for new IFRS accounting standards (paragraph 2.1) and a voluntary accounting policy change (paragraph 2.3) that became effective per January 1, 2020.

2.1. New IFRS accounting standards effective from 2020

The following standards, interpretations, amendments to standards became effective for Aegon from January 1, 2020, and have been endorsed by the European Union:

 

 

Amendments to IFRS 3 Business Combinations: Definition of a Business;

 

Amendments to IAS 1 and IAS 8: Definition of Material; and

 

Amendments to References to the Conceptual Framework in IFRS Standards.

None of these revised standards and interpretations are significantly impacting the financial position or the condensed consolidated interim financial statements.

 

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Condensed consolidated interim financial statements 1H 2020 Results

 

2.2. Future adoption of new IFRS-EU accounting standards and amendments

On June 25, 2020, the IASB decided, application subject to EU endorsement process, to defer the effective date of IFRS 17 to annual reporting periods beginning on or after January 1, 2023 (and also extend the fixed expiry date of the temporary exemption from applying IFRS 9 in IFRS 4 to annual reporting periods beginning on or after January 1, 2023). Aegon welcomes this initiative and intends to align its IFRS 17 implementation date accordingly.

2.3. Voluntary change in accounting policy

Effective January 1, 2020, Aegon adopted a voluntary accounting policy change related to the deferred cost of reinsurance, which is applied retrospectively for all periods presented.

Reinsurance accounting

As of January 1, 2020, Aegon has voluntarily changed its accounting policy for the deferred cost of reinsurance. A deferred cost of reinsurance is established when Aegon enters into a reinsurance transaction, except for reinsurance transactions that are entered into as part of a plan to exit a business.

Under the previous accounting policy, the amortization of the deferred cost of reinsurance is based solely on assumptions relating to the underlying insurance contracts. Under the new accounting policy, for products sold in the Americas and Asia where the amortization is based on expected gross profit margins (EGPs), these EGPs are net of reinsurance (i.e. net of actual reinsurance cash flows that exceed expected reinsurance cash flows). Additionally, the reinsurance cash flows used to calculate the amortization rate are unlocked prospectively. The accounting policy on the amortization of similar intangibles, such as deferred policy acquisition costs, are updated accordingly.

The new policy was adopted because it better reflects the economics of Aegon’s reinsurance transactions and aligns to current market practice. The previous accounting policy would have resulted in significant income volatility in the event of incurred claims with large sums insured, despite the fact that a significant part of the losses is reinsured.

Impact of the adjustment on previous periods is provided in the following tables, including references to the notes that are impacted by the change in accounting policy.

 

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Condensed consolidated interim financial statements 1H 2020 Results

 

Impact of voluntary change in accounting policy on the condensed consolidated income statement

 

 
   
            

First half 2019

(as previously

reported)

    Change in accounting
policy related to
Reinsurance Accounting
    First half 2019
(restated)
 
   

Income from reinsurance ceded

        1,815       28       1,844  

Benefits and expenses

        39,671       30       39,701  

Income tax benefit/(expense)

        (133     -       (133

Net income/(loss)

              618       (2     617  
   

Net income/(loss) attributable to:

           

- Owners of Aegon NV

        618       (2     616  

- Non-controlling interest

        -       -       -  
   

Earnings per share (EUR per share)

     14           

Basic earnings per common share

        0.28       -       0.28  

Basic earnings per common share B

        0.01       -       0.01  

Diluted earnings per common share

        0.28       -       0.28  

Diluted earnings per common share B

        0.01       -       0.01  
   

Earnings per common share calculation

           

Net income/(loss) attributable to owner

        618       (2     616  

Coupons on perpetual securities

        (48     -       (48

Coupon on non-cumulative subordinated notes

              -       -       -  

Earnings attributable to common shares and common shares B

        570       (2     568  
   

Earnings attributable to common shareholders

        566       (2     564  

Earnings attributable to common shareholders B

        4       -       4  
   

Weighted average number of common shares outstanding (in million)

        2,036       -       2,036  

Weighted average number of common shares B outstanding (in million)

              572       -       572  
         

Impact of voluntary change in accounting policy on the condensed consolidated statement of comprehensive income

 

 
   
             First half 2019
(as previously
reported)
    Change in accounting
policy related to
Reinsurance Accounting
    First half 2019
(restated)
 
   

Net income

        618       (2     617  

Items that may be reclassified to profit or loss:

           

Gains/(losses) on revaluation of available for sale investments

        2,591       5       2,596  
   

Movement in foreign currency translation and net foreign investment hedging reserves

        39       -       39  
   

Income tax relating to items that may be reclassified

        (518     (1     (519

Total comprehensive income/(loss)

              2,228       2       2,229  
   

Total comprehensive income/(loss) attributable to:

           

- Owners of Aegon NV

        2,227       2       2,229  

- Non-controlling interest

              -       -       -  
         

Impact of voluntary change in accounting policy on the condensed consolidated statement of financial position

 

 
   
             Dec 31, 2019
(as previously
reported) 1
    Change in accounting
policy related to
Reinsurance Accounting
    Dec 31, 2019
(restated)
 
   

Assets

           

Reinsurance assets

        20,835       (582     20,253  

Deferred expenses

        10,804       2       10,806  

Other assets and receivables

        9,035       1       9,036  

Intangible assets

        1,559       -       1,559  

Equity and liabilities

           

Shareholders’ equity

        22,457       (8     22,449  

Insurance contracts

     15        123,454       (569     122,885  

Other liabilities

              21,225       (2     21,223  
1 As reported in Aegon’s Integrated Annual Report 2019 dated March 18, 2020.

 

 
         

Impact of voluntary change in accounting policy on the condensed consolidated statement of changes in equity

 

 
   
             June 30, 2019
(as previously
reported)
    Change in accounting
policy related to
Reinsurance Accounting
    June 30, 2019
(restated)
 
   

Share capital

        7,669       -       7,669  

Retained earnings

        10,492       (11     10,481  

Revaluation reserves

        5,305       3       5,308  

Remeasurement of defined benefit plans

        (2,191     -       (2,191

Other reserves

              206       -       205  

Shareholders’ equity

              21,481       (8     21,472  

The impact of the change in accounting policy on Aegon’s net income for first half year 2020 and shareholders’ equity and Aegon’s statement of financial position at June 30, 2020 is not significant.

 

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2.4. Judgments and critical accounting estimates

Preparing the condensed consolidated interim financial statements requires management to make judgments, estimates and assumptions, including the likelihood, timing or amount of future transactions or events, that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. These estimates are inherently subject to change and actual results could differ from those estimates.

Uncertainty resulting from COVID-19

Over the first half of 2020 the world has seen substantial disruption caused by COVID-19. Alongside related market volatility, there is general uncertainty on how the pandemic will play out and the continued economic impact it will have.

There were no significant impacts from COVID-19 on Level-III measurements as at 30 June 2020. Note 13 Fair value provides more information on the fair valuation methods and assumptions applied, as well as movements or transfers in fair value hierarchy.

Whilst Aegon has seen, in some lines of business, lower premiums and deposits, higher incurred claims and claims handling expenses over 1H 2020, there is currently insufficient credible experience with which to update actuarial assumptions for COVID-19 specifically. In certain businesses Aegon has incurred losses related to COVID-19. In the Americas, Aegon recorded unfavorable mortality results of EUR 34 million which can be specifically attributed to COVID-19, based on the cause of death reported on the death certificate. However, actual COVID-19 related deaths will likely be higher as not all deaths are tested on COVID-19 and/ or labelled as COVID-19. In the Netherlands, there were EUR 9 million non-life claims from travel insurance and disability insurance due to the COVID-19 crisis. Going forward, Aegon expects that there will be COVID-19 related deaths allowing the release of reserves for its Pension business in the Netherlands and the LTC business in the Americas. However, this is expected to be smaller than the unfavorable mortality.

The impairment losses are higher than previous reporting periods, mainly driven by COVID-19 impacts. Impairment assessments were performed where deemed necessary, however no significant impairments were recorded. Refer to note 8 for additional information on Impairment charges/(reversals).

As a result of the uncertainty in the market and adverse impact of COVID-19, Aegon recorded impairments in the energy, energy maintenance technologies, and airlines sectors, refer to note 8 Impairment charges / (reversals) for more details. To date there is uncertainty on the full impact of the current circumstances on the allowance for credit losses on portfolios of consumer loans and other asset classes at risk as in certain cases policyholders received payment holiday for 3 to 6 months. In the first half of 2020 there were no significant contract modifications due to COVID-19, which would lead to the derecognition of the original asset or liability.

Revised sales and earnings projections have been considered in the periodic impairment assessment of non-financial assets, which has led to the write-off of EUR 14 million customer-related intangibles.

Given the inherent economic uncertainty, Aegon has updated the sensitivity analysis for the impact of changes in financial assumptions on its IFRS equity and net income included in note 19 Financial risks. Please refer to note 14 Share capital for more details.

Actuarial and economic assumptions

During the first half of 2020, Aegon implemented actuarial assumptions and model updates resulting in a pre-tax charge of EUR 357 million (1H 2019: EUR 64 million pre-tax charge), attributable to Aegon’s business in the Americas. Please note that Asia, which would historically have had its actuarial assumption updates reflected in the second quarter, was moved to the fourth quarter in line with the timing of the assumption changes of the other businesses included in the new reportable segment ‘International’. Refer to note 3 Segment information for a description of the individual actuarial assumptions changed in the period.

 

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In the first half of 2020, Aegon’s economic assumptions were updated downwards to reflect the current low interest rate environment in Aegon’s long-term interest assumption. As a consequence, Aegon lowered its long-term assumption for 10-year US Treasury yields by 1.5% from 4.25% to 2.75%. Aegon also changed its assumed returns for US separate account bond fund to 3% over the next 10 years and 4% thereafter, from its previous assumptions of 4% over the next 10 years and 6% thereafter. These changes to the economic assumptions have resulted in a pre-tax charge of EUR 494 million, of which EUR 477 million recorded in the Americas and EUR 17 million in International.

Sensitivities

Please note that the sensitivities listed in the disclosures below represent sensitivities to Aegon’s position at reporting date for the respective periods. The sensitivities reflect single shocks where other elements remain unchanged. Real world market impacts (e.g. lower interest rates and declining equity markets) may happen simultaneously which can lead to more severe combined impacts and may not be equal to the sum of the individual sensitivities presented in the disclosure.

Sensitivity on variable annuities and variable life insurance products in the United States

A 1% decrease in the expected long-term equity growth rate with regard to Aegon’s variable annuities and variable life insurance products in the United States would result in a decrease in DPAC and VOBA balances and reserve strengthening of approximately EUR 124 million (December 31, 2019: EUR 111 million). The DPAC and VOBA balances for these products in the United States amounted to EUR 2.6 billion at June 30, 2020 (December 31, 2019: EUR 2.7 billion).

A relative increase of 10% to the mortality assumption, dependent on product and characteristics of the block of business, would reduce net income by approximately EUR 102 million (December 31, 2019: reduce net income by EUR 204 million). A relative 20% increase in the lapse rate assumption would increase net income by approximately EUR 112 million (December 31, 2019: EUR 126 million).

Any reasonably possible changes in the other assumptions (i.e. maintenance expenses) that Aegon uses to determine EGP margins would reduce net income by EUR 13 million (December 31, 2019: EUR 13 million).

Sensitivity on long term care products (LTC) in the United States

After tax sensitivities of significant product liability assumptions on the LTC IFRS Gross Present Value Reserve (GPV) are indicated below. The GPV is the liability as determined on a best estimate assumption basis. There is an unlocking event in 1H 2020 on the loss recognition block of LTC with assumption updates implemented, decreasing income before tax by EUR 88 million.

A 5% increase in the incidence rates with regard to Aegon’s long term care products would result in a GPV increase of approximately EUR 182 million (December 31, 2019: EUR 178 million). A 5% decrease in the incidence rates with regard to Aegon’s long term care products would result in a GPV decrease of approximately EUR 182 million (December 31, 2019: EUR 178 million).

Removing the morbidity improvement, which is a component of the incidence assumption, would result in a GPV increase of approximately EUR 272 million (December 31, 2019: EUR 535 million), of which approximately EUR 182 million (December 31, 2019: EUR 445 million) relates to the loss recognition block. The impact for the current period has decreased due to the reduction in the morbidity improvement assumption, refer to model and assumption updates included in note 3.2.

Reducing mortality 10% would result in a GPV increase of approximately EUR 91 million (December 31, 2019: EUR 89 million). Increasing mortality 10% would result in a GPV decrease of approximately EUR 91 million (December 31, 2019: EUR 89 million).

Removing future mortality improvement would result in a GPV decrease of approximately EUR 91 million (December 31, 2019: EUR 89 million).

 

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Sensitivity on liability adequacy test (LAT) in the Netherlands

The LAT deficit per June 30, 2020 in Aegon the Netherlands amounted to EUR 6.1 billion, which was partially offset by the shadow loss recognition of EUR 4.4 billion, resulting in a net deficit of EUR 1.6 billion (December 31, 2019: EUR 1.6 billion). Please also refer to Note 2.19f Liability adequacy testing of Aegon’s 2019 Annual Report for further details on the accounting policy.

Sensitivities of Aegon the Netherlands on interest rate, bond credit spread, mortgage spread and liquidity premium assumptions to assess the impact on the LAT test have not significantly changed compared to the sensitivities as reported in the 2019 Integrated Annual Report.

2.5 Other

Taxes

Taxes on income for the six-month period ended June 30, 2020, are calculated using the tax rate that is estimated to be applicable to earnings for the full year.

Exchange rates

Assets and liabilities of foreign operations are translated to the presentation currency at the closing rates on the reporting date. Income, expenses and capital transactions (such as dividends) are translated at average exchange rates or at the prevailing rates on the transaction date, if more appropriate. The following exchange rates (most important rates) are applied for the condensed consolidated interim financial statements:

Closing exchange rates

         
                  USD    GBP
         

June 30, 2020

   1    EUR    1.1232    0.9090
         

December 31, 2019

   1    EUR    1.1225    0.8473

Weighted average exchange rates

           
         
               USD    GBP
         

Six months ended June 30, 2020

   1    EUR    1.1017    0.8737
         

Six months ended June 30, 2019

   1      EUR        1.1299        0.8730    

 

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3. Segment information

3.1. Change in operating segments

As of January 1, 2020, Aegon’s activities in Southern and Eastern Europe and Asia, previously reported in two separate operating segments, have been brought together in a new operating segment, International. The objective is to integrate the two organizations, accelerate growth and leverage cross-border synergies.

The change in segment reporting does not have an impact on the financial position, results of operations or cash flows of Aegon. The tables presented in this document have been updated to reflect this change.

3.2. Income statement

 

                     
EUR millions    Americas     The
Netherlands
    United
Kingdom
    International     Asset
management
    Holdings and
other
activities
    Eliminations     Segment
total
   

Joint

ventures and
associates
eliminations

    Consolidated  

Six months ended June 30, 2020

                        
     

Underlying earnings before tax geographically

     264       321       81       75       71       (113     1       700       10       710  

Fair value items

     (760     1,380       89       (1     (7     (21     -       680       (30     650  

Realized gains / (losses) on investments

     5       2       -       8       1       -       -       16       (5     11  

Impairment charges

     (134     (66     -       (5     -       (4     -       (209     -       (209

Impairment reversals

     15       -       -       -       -       -       -       15       -       15  

Other income / (charges)

     (938     (48     (53     25       -       (56     -       (1,071     1       (1,070

Run-off businesses

     4       -       -       -       -       -       -       4       -       4  

Income / (loss) before tax

     (1,545     1,589       117       102       64       (193     1       135       (24     111  

Income tax (expense) / benefit

     380       (315     (3     (11     (18     34       -       68       24       92  

Net income / (loss)

     (1,165     1,274       114       91       46       (159     1       202       -       202  

Inter-segment underlying earnings

     (18     (45     (44     (18     92       35              
     

Revenues

                        
     

Life insurance gross premiums

     3,617       978       2,735       611       -       4       (3     7,942       (416     7,526  

Accident and health insurance

     728       169       13       150       -       -       -       1,060       (37     1,022  

Property & casualty insurance

     -       66       -       194       -       -       -       260       (65     195  

Total gross premiums

     4,345       1,212       2,748       955       -       4       (3     9,262       (518     8,744  

Investment income

     1,562       1,063       1,259       187       3       129       (139     4,063       (29     4,034  

Fee and commission income

     796       125       98       26       336       -       (89     1,291       (121     1,170  

Other revenues

     4       -       -       1       1       2       -       8       (6     2  

Total revenues

     6,707       2,400       4,105       1,168       340       135       (231     14,624       (673     13,951  

Inter-segment revenues

     -       9       -       -       89       133                                  
                    
                     
EUR millions    Americas     The
Netherlands
    United
Kingdom
    International     Asset
management
    Holdings and
other
activities
    Eliminations     Segment
total
   

Joint

ventures and
associates
eliminations

    Consolidated  

Six months ended June 30, 2019

                        
     

Underlying earnings before tax geographically

     577       328       70       71       60       (97     -       1,008       26       1,034  

Fair value items

     157       (459     (76     (6     -       (10     -       (394     (42     (436

Realized gains / (losses) on investments

     24       230       1       19       -       1       -       275       (1     274  

Impairment charges

     (30     (13     -       -       -       (10     -       (54     -       (53

Impairment reversals

     11       4       -       -       -       -       -       15       -       15  

Other income / (charges)

     (63     4       (16     24       (1     (41     -       (93     -       (93

Run-off businesses

     8       -       -       -       -       -       -       8       -       8  

Income / (loss) before tax

     686       93       (22     108       59       (159     -       765       (16     749  

Income tax (expense) / benefit

     (101     (26     (23     (11     (16     28       -       (148     16       (132

Net income / (loss)

     585       67       (44     98       43       (130     -       617       -       617  

Inter-segment underlying earnings

     (33     (56     (42     (10     96       46              
     

Revenues

                        

Life insurance gross premiums

     3,619       852       3,291       694       -       6       (4     8,458       (374     8,084  

Accident and health insurance

     702       164       14       148       -       -       -       1,028       (32     996  

Property & casualty insurance

     -       66       -       193       -       1       (1     259       (63     196  

Total gross premiums

     4,320       1,081       3,305       1,036       -       6       (5     9,745       (469     9,276  

Investment income

     1,577       1,122       1,230       188       2       139       (144     4,114       (31     4,083  

Fee and commission income

     848       114       95       54       297       -       (94     1,315       (102     1,213  

Other revenues

     3       -       -       1       -       3       -       7       (4     3  

Total revenues

     6,749       2,318       4,631       1,279       300       148       (243     15,180       (606     14,575  

Inter-segment revenues

     -       4       -       -       94       144                                  

Aegon’s segment information is prepared by consolidating on a proportionate basis Aegon’s joint ventures and associated companies.

A total pre-tax charge of EUR 850 million (1H 2019: EUR 64 million pre-tax charge) has been recorded in other income/(charges) in respect of both actuarial and economic assumption updates of EUR 357 million and EUR 494 million, respectively.

 

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The negative impact in respect of actuarial assumption updates amounted to EUR 357 million and is attributable to Aegon’s business in the Americas. This was mainly driven by assumption updates to Individual Life products for premium persistency, to reflect recent experience in customer behavior, and increase in mortality assumptions to reflect recent adverse experience. Negative impacts were also driven by updates to the surrender assumption for Variable Deferred Annuities, to reflect recent experience in customer behavior, and updates to Long Term Care for a reduction in the morbidity improvement assumption, to be consistent with industry practice. These adverse items were partially offset by gains driven by an increase in mortality assumptions for Variable Deferred Annuities, which now reflects recent experience.

The impact in respect of economic assumptions amounted to EUR 494 million, consisting of Aegon Americas of EUR 477 million and International of EUR 17 million, and is the result of lowering Aegon’s long-term interest rate assumption to 2.75% and the associated impact on separate account bond fund returns (refer to note 2.4 Judgments and critical accounting estimates for details).

3.3. Investments

Amounts included in the tables on investments are presented on an IFRS basis, which means that investments in joint ventures and associates are not consolidated on a proportionate basis. Instead, these investments are included on a single line using the equity method of accounting.

 

EUR millions                                                              
June 30, 2020    Americas     The
Netherlands
     United
Kingdom
     International      Asset
Management
     Holdings
and other
activities
     Eliminations     Total  

Investments

                         

Shares

     406       1,391        12        76        4        136        -       2,025  

Debt securities

     59,827       28,260        992        8,293        61        2        -       97,434  

Loans

     11,029       34,469        -        129        -        40        -       45,667  

Other financial assets

     10,086       83        1,007        117        92        27        -       11,412  

Investments in real estate

     593       2,381        -        18        -        -        -       2,992  

Investments general account

     81,941       66,584        2,011        8,632        157        204        -       159,530  

Shares

     -       7,707        14,705        155        -        -        (3     22,564  

Debt securities

     1,390       11,603        7,635        160        -        -        -       20,788  

Unconsolidated investment funds

     102,231       665        56,450        606        -        -        -       159,953  

Other financial assets

     (555     4,539        5,118        4        -        -        -       9,106  

Investments in real estate

     -       -        516        -        -        -        -       516  

Investments for account of policyholders

     103,066       24,514        84,424        925        -        -        (3     212,926  
     

Investments on balance sheet

     185,007       91,098        86,435        9,557        157        204        (3     372,456  

Off balance sheet investments third parties

     218,056       5,062        111,569        6,161        169,919        -        (94     510,673  

Total revenue generating investments

     403,063       96,160        198,004        15,718        170,076        204        (97     883,129  

Investments

                         

Available-for-sale

     67,074       23,423        1,579        8,471        74        40        -       100,661  

Loans

     11,029       34,469        -        129        -        40        -       45,667  

Financial assets at fair value through profit or loss

     106,311       30,825        84,340        939        83        125        (3     222,620  

Investments in real estate

     593       2,381        516        18        -        -        -       3,508  

Total investments on balance sheet

     185,007       91,098        86,435        9,557        157        204        (3     372,456  
     

Investments in joint ventures

     -       1,199        -        607        183        -        -       1,989  

Investments in associates

     58       89        8        33        132        25        (10     336  

Other assets

     39,443       24,139        4,018        2,754        344        36,630        (37,510     69,818  

Consolidated total assets

     224,509       116,525        90,461        12,951        816        36,859        (37,522     444,598  

 

Unaudited

 

 

 

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EUR millions                                                               
December 31, 2019    Americas      The
Netherlands
     United
Kingdom
     International      Asset
Management
     Holdings
and other
activities
     Eliminations     Total  

Investments

                          

Shares

     499        1,443        17        84        5        173        -       2,221  

Debt securities

     54,970        22,773        1,055        7,962        93        1        -       86,853  

Loans

     10,922        34,235        -        160        -        48        -       45,365  

Other financial assets

     8,032        78        962        148        168        21        -       9,410  

Investments in real estate

     653        2,229        -        19        -        -        -       2,901  

Investments general account

     75,076        60,757        2,034        8,373        266        244        -       146,750  

Shares

     -        8,490        16,583        218        -        -        (4     25,288  

Debt securities

     877        11,652        8,043        173        -        -        -       20,744  

Unconsolidated investment funds

     106,926        695        61,738        680        -        -        -       170,039  

Other financial assets

     161        4,653        4,898        4        -        -        -       9,716  

Investments in real estate

     -        -        586        -        -        -        -       586  

Investments for account of policyholders

     107,963        25,491        91,848        1,076        -        -        (4     226,374  
     

Investments on balance sheet

     183,039        86,248        93,882        9,449        266        244        (4     373,124  

Off balance sheet investments third parties

     220,039        4,802        123,904        6,463        170,158        -        (818     524,547  

Total revenue generating investments

     403,078        91,050        217,786        15,911        170,424        244        (822     897,671  

Investments

                          

Available-for-sale

     59,899        19,591        1,556        8,172        153        32        -       89,404  

Loans

     10,922        34,235        -        160        -        48        -       45,365  

Financial assets at fair value through profit or loss

     111,565        30,193        91,740        1,098        113        164        (4     234,867  

Investments in real estate

     653        2,229        586        19        -        -        -       3,487  

Total investments on balance sheet

     183,039        86,248        93,882        9,449        266        244        (4     373,124  
     

Investments in joint ventures

     -        1,159        -        668        153        3        -       1,983  

Investments in associates

     79        106        9        28        129        21        (10     363  

Other assets

     36,351        21,983        3,764        2,920        292        33,210        (33,447     65,073  

Consolidated total assets

     219,469        109,496        97,655        13,065        840        33,478        (33,461     440,543  

4. Premium income and premiums paid to reinsurers

 

                    
EUR millions    First half
2020
     First half
2019
 
   

Premium income

       

Life insurance

     7,526        8,084  

Non-life insurance

     1,217        1,192  

Total premium income

     8,744        9,276  

Accident and health insurance

     1,022        996  

Property & casualty insurance

     195        196  

Non-life Insurance premium income

     1,217        1,192  
   

Premiums paid to reinsurers 1

       

Life insurance

     1,114        1,163  

Non-life insurance

     86        73  

Total premiums paid to reinsurers

     1,200        1,236  

Accident and health insurance

     73        67  

Property & casualty insurance

     14        6  

Non-life Insurance paid to reinsurers

     86        73  
1 

Premiums paid to reinsurers are recorded within Benefits and expenses in the income statement - refer to note 7 - Benefits and expenses.

5. Investment income

 

                    
EUR millions    First half
2020
     First half
2019
 
   

Interest income

     2,805        2,971  

Dividend income

     1,165        1,051  

Rental income

     64        60  

Total investment income

     4,034        4,083  
   

Investment income related to general account

     2,591        2,632  

Investment income for account of policyholders

     1,443        1,451  

Total

     4,034        4,083  

 

Unaudited

 

 

 

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6. Results from financial transactions

 

                   
EUR millions    First half
2020
    First half
2019
 
   

Net fair value change of general account financial investments at FVTPL other than derivatives

     (219     173  

Realized gains /(losses) on financial investments

     (3     262  

Gains /(losses) on investments in real estate

     11       89  

Net fair value change of derivatives

     (127     1,557  

Net fair value change on for account of policyholder financial assets at FVTPL

     (4,294     22,146  

Net fair value change on investments in real estate for account of policyholders

     (36     (6

Net foreign currency gains /(losses)

     (22     14  

Net fair value change on borrowings and other financial liabilities

     5       1  

Total

     (4,685     24,237  

The decrease in results from financial transactions is driven by the lower net fair value change on for account of policyholder financial assets at FVTPL for the first six months of 2020 compared to the first six months of 2019. The decrease is mainly driven by unfavorable equity markets and interest rate movements. Refer to note 2.4 Judgments and critical accounting estimates for additional information regarding equity markets and interest rate environment. Net fair value change on for accounts of policyholder financial assets at FVTPL is offset by amounts in the “Claims and benefits” line reported in note 7 Benefits and expenses.

7. Benefits and expenses

 

                   
EUR millions    First half
2020
    First half
2019
 
   

Claims and benefits

     8,726       37,907  

Employee expenses

     1,038       1,078  

Administration expenses

     822       720  

Deferred expenses

     (400     (407

Amortization charges

     513       403  

Total

     10,700       39,701  
    
                   
EUR millions    First half
2020
    First half
2019
 
   

Benefits and claims paid life

     6,246       9,545  

Benefits and claims paid non-life

     779       814  

Change in valuation of liabilities for insurance contracts

     1,465       20,591  

Change in valuation of liabilities for investment contracts

     (2,134     4,587  

Other

     6       (37

Policyholder claims and benefits

     6,362       35,499  

Premium paid to reinsurers

     1,200       1,236  

Profit sharing and rebates

     4       8  

Commissions

     1,159       1,164  

Total

     8,726       37,907  

The lines “change in valuation of liabilities for insurance contracts” and “change in valuation of liabilities for investment contracts” reflect changes in technical provisions resulting from net fair value changes on for account of policyholder financial assets at FVTPL included in Results from financial transactions (note 6) of EUR 4,294 million negative for 1H 2020 (1H 2019: EUR 22,146 million positive). In addition, the line “change in valuation of liabilities for insurance contracts” includes an increase of technical provisions for life insurance contracts of EUR 3,704 million for 1H 2020 (1H 2019: increase of EUR 1,995 million).

 

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8. Impairment charges/(reversals)

 

                   
EUR millions    First half
2020
    First half
2019
 
   

Impairment charges / (reversals) comprise:

      

Impairment charges on financial assets, excluding receivables

     226       70  

Impairment reversals on financial assets, excluding receivables

     (15     (15

Impairment charges / (reversals) on non-financial assets and receivables

     36       98  

Total

     246       153  
   

Impairment charges on financial assets, excluding receivables, from:

      

Shares

     6       3  

Debt securities and money market instruments

     140       29  

Loans

     80       38  

Total

     226       70  
   

Impairment reversals on financial assets, excluding receivables, from:

      

Debt securities and money market instruments

     (15     (11

Loans

     -       (4

Other

     -       (1

Total

     (15     (15

Impairment charges/(reversals) on financial assets in the first half 2020 were mainly driven by Americas impairments on public fixed income holdings, primarily in the energy sector, as a consequence of the weakening demand and the nationwide lockdown due to COVID-19.

9. Other charges

Other charges of EUR 101 million are mainly driven by a settlement in the litigation case related to monthly deduction rate adjustments on certain universal life policies in the Americas.

10. Income tax

The income tax benefit for 1H 2020 amounts to EUR 92 million. In addition to the recurring beneficial impacts of exempt income (mainly US Dividend Received Deduction) and US tax credits, income tax for the six-month period ended June 30, 2020 includes the one-off beneficial impacts from tax rates changes in the Netherlands (from 25% to 21.7%) and the United Kingdom (from 17% to 19%) totaling EUR 75 million.

 

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11. Investments

 

                    
EUR millions    Jun. 30, 2020                      Dec. 31, 2019  
   

Available-for-sale (AFS)

     100,661         89,404   

Loans

     45,667         45,365   

Financial assets at fair value through profit or loss (FVTPL)

     10,210         9,080   

Financial assets, for general account, excluding derivatives

     156,538         143,849   

Investments in real estate

     2,992         2,901   

Total investments for general account, excluding derivatives

     159,530         146,750   

 

 

Financial assets, for general account, excluding derivatives

 

                               

EUR millions

     AFS        FVTPL        Loans        Total  
   

Shares

     331        1,693        -        2,025  

Debt securities

     91,827        5,607        -        97,434  

Money market and other short-term investments

     7,463        110        -        7,573  

Mortgages loans

     -        -        39,288        39,288  

Private loans

     -        -        4,257        4,257  

Deposits with financial institutions

     -        -        91        91  

Policy loans

     -        -        1,980        1,980  

Other

     1,040        2,799        51        3,890  

June 30, 2020

     100,661        10,210        45,667        156,538  
               
       AFS        FVTPL        Loans        Total  
   

Shares

     409        1,813        -        2,221  

Debt securities

     82,918        3,934        -        86,853  

Money market and other short-term investments

     5,169        158        -        5,327  

Mortgages loans

     -        -        38,524        38,524  

Private loans

     -        -        4,487        4,487  

Deposits with financial institutions

     -        -        141        141  

Policy loans

     -        -        2,024        2,024  

Other

     908        3,175        188        4,272  

December 31, 2019

     89,404        9,080        45,365        143,849  

Total investments for general account, excluding derivatives increased in the first half of 2020 by EUR 12.7 billion to EUR 159.5 billion compared to December 31, 2019 mainly due to additions and increased investment return, driven by declining interest rates in Americas and the Netherlands.

On February 3, 2020, Aegon’s subsidiary in the Americas, accepted via a letter of intent an offer to sell the Transamerica Pyramid property for a tentative consideration of EUR 635 million (USD 711 million). A purchase and sale agreement was reached on June 30, 2020 for consideration of EUR 590 million (USD 650 million), with the sale expected to close in the second half of 2020. A total loss of EUR 64 million (USD 71 million) has been recorded in Note 6 Results from financial transaction, in gains/(losses) on investments in real estate, in respect of the market revaluation of this property in the Americas.

12. Investments for account of policyholders

 

    

 

               
EUR millions    Jun. 30, 2020                      Dec. 31, 2019  
   

Shares

     22,564         25,288   

Debt securities

     20,788         20,744   

Money market and short-term investments

     1,466         1,805   

Deposits with financial institutions

     3,694         3,278   

Unconsolidated investment funds

     159,953         170,039   

Other

     3,945         4,634   

Total investments for account of policyholders at fair value through profit or loss, excluding derivatives

     212,410         225,788   

Investment in real estate

     516         586   

Total investments for account of policyholders

     212,926         226,374   

Investments for account of policyholders decreased in the first half of 2020 by EUR 13.4 billion to EUR 213 billion compared to December 31, 2019 mainly due to negative market movements and withdrawals in the US, and the impact of foreign currency translations.

 

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13. Fair value

The following tables provide an analysis of financial instruments recorded at fair value on a recurring basis by level of the fair value hierarchy:

 

 

Fair value hierarchy

 

                                            
EUR millions    As at June 30, 2020   As at December 31, 2019
      Level I    Level II    Level III   Total   Level I    Level II    Level III   Total
       

Financial assets carried at fair value

                      

Available-for-sale investments

                      

Shares

     86        84        161       331       92        160        157       409  

Debt securities

     27,924        63,424        479       91,827       25,528        56,317        1,074       82,918  

Money markets and other short-term instruments

     1,720        5,743        -       7,463       1,255        3,914        -       5,169  

Other investments at fair value

     -        518        522        1,040       -        426        482        908  

Total Available-for-sale investments

     29,730        69,768        1,162       100,661       26,875        60,817        1,712       89,404  
       

Fair value through profit or loss

                      

Shares

     66        238        1,389       1,693        106        306        1,401       1,813  

Debt securities

     211        5,392        4       5,607       204        3,727        4       3,934  

Money markets and other short-term instruments

     17        94        -       110       19        139        -       158  

Other investments at fair value

     1        785        2,013       2,799       1        1,125        2,049       3,175  

Investments for account of policyholders 1

     113,220        97,517        1,673       212,410       120,271        103,712        1,805       225,788  

Derivatives

     54        17,515        94       17,663       96        11,006        56       11,157  

Total Fair value through profit or loss

     113,569        121,541        5,173       240,283       120,696        120,014        5,314       246,024  

Total financial assets at fair value

     143,299        191,310        6,336       340,944       147,571        180,831        7,026       335,429  
       

Financial liabilities carried at fair value

                      

Investment contracts for account of policyholders 2

     -        56,414        165       56,579       -        59,759        197       59,956  

Borrowings 3

     -        456        -       456       -        461        -       461  

Derivatives

     142        11,197        6,636       17,975       59        8,476        3,081       11,616  

Total financial liabilities at fair value

     142        68,066        6,801       75,010       59        68,696        3,278       72,033  

1 The investments for account of policyholders included in the table above represents only those investments carried at fair value through profit or loss.

2 The investment contracts for account of policyholders included in the table above represents only those investment contracts carried at fair value.

3 Total borrowings on the statement of financial position contain borrowings carried at amortized cost that are not included in the above schedule.

Significant transfers between Level I, Level II and Level III

There have been no significant transfers between Level I and II for financial assets and financial liabilities recorded at fair value on a recurring basis during the six-month period ended June 30, 2020.

Movements in Level III financial instruments measured at fair value

The following table summarizes the change of all assets and liabilities measured at estimated fair value on a recurring basis using significant unobservable inputs (‘Level III’), including realized and unrealized gains (losses) of all assets and liabilities and unrealized gains (losses) of all assets and liabilities still held at the end of the respective period.

EUR 635 million of investments were previously reported in level III as they were being internally modeled, priced by a fund manager or priced by uncorroborated broker quotes. As of June 30, 2020, these are primarily priced by a pricing service and are reported in level II.

 

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Roll forward of Level III financial instruments

 

 

                                                               
   
EUR millions   January 1,
2020
   

Acquisitions

through

business

combinations

   

Total gains /

losses in

income

statement 1

   

Total gains /

losses in OCI 2

    Purchases     Sales     Settlements    

Net exchange

differences

    Reclassification    

Transfers from

Level I and

Level II

   

Transfers to

Level I and

Level II

    June 30, 2020    

Total unrealized gains

and losses for the period

recorded in the P&L for

instruments held at June

30, 2020 ³

 

Financial assets carried at fair value available-for-sale investments

                             

Shares

    157       -       -       5       4       (2     -       -       -       -       (2     161       -  

Debt securities

    1,074       -       2       (31     67       (6     (23     11       -       20       (635     479       -  

Money markets and other short-term instruments

    -       -       -       -       -       -       -       -       -       -       -       -       -  

Other investments at fair value

    482       -       (72     9       122       (3     (15     (1     -       -       -       522       -  
      1,712       -       (70     (16     193       (11     (38     10       -       20       (637     1,162       -  
     

Fair value through profit or loss

                             

Shares

    1,401       -       (62     -       82       (33     -       -       -       -       -       1,389       (60

Debt securities

    4       -       -       -       34       (33     -       -       -       -       -       4       -  

Other investments at fair value

    2,049       -       (121     -       198       (100     -       (1     -       1       (13     2,013       (109

Investments for account of policyholders

    1,805       -       (80     (1     221       (246     -       (19     -       -       (7     1,673       (11

Derivatives

    56       -       38       -       -       -       -       -       -       -       -       94       38  
      5,314       -       (226     (1     536       (411     -       (20     -       1       (21     5,173       (142
     

Financial liabilities carried at fair value

                             

Investment contracts for account of policyholders

    197       -       (12     -       1       (20     -       -       -       -       -       165       2  

Derivatives

    3,081       -       3,631       (9     2       (7     -       (61     -       -       -       6,636       463  
      3,278       -       3,618       (9     3       (28     -       (61     -       -       -       6,801       465  

 

                           
EUR millions  

January 1,

2019

   

Acquisitions

through

business

combinations

   

Total gains /

losses in

income

statement 1

   

Total gains /

losses in OCI 2

    Purchases     Sales     Settlements    

Net exchange

differences

    Reclassification    

Transfers from

Level I and

Level II

   

Transfers to

Level I and

Level II

   

December 31,

2019

   

Total unrealized gains

and losses for the period

recorded in the P&L for
instruments held at

December 31, 2019 ³

 

Financial assets carried at fair value available-for-sale investments

                             

Shares

    241       -       -       (5     22       (100     -       4       2       -       (7     157       -  

Debt securities

    1,242       -       3       21       319       (317     (68     19       (2     52       (195     1,074       -  

Money markets and other short-term instruments

    -       -       -       -       1,061       (855     (103     -       -       126       (229     -       -  

Other investments at fair value

    493       -       (100     (56     183       (25     (23     9       -       -       -       482       -  
      1,976       -       (97     (40     1,584       (1,297     (194     32       1       178       (431     1,712       -  
     

Fair value through profit or loss

                             

Shares

    1,226       -       72       -       368       (266     -       1       -       -       -       1,401       62  

Debt securities

    17       -       (1     -       1       (12     (1     -       (1     -       -       4       -  

Other investments at fair value

    1,376       -       34       -       884       (268     -       23       -       85       (86     2,049       36  

Investments for account of policyholders

    1,871       -       45       -       435       (567     -       20       -       -       -       1,805       86  

Derivatives

    35       -       19       -       35       (33     -       -       -       -       -       56       20  
      4,525       -       170       -       1,723       (1,146     (1     44       (1     85       (86     5,314       204  
     

Financial liabilities carried at fair value

                             

Investment contracts for account of policyholders

    206       -       9       -       4       (23     -       1       -       -       -       197       (10

Derivatives

    2,489       -       597       4       -       (22     -       13       -       -       -       3,081       84  
      2,695       -       605       4       4       (46     -       15       -       -       -       3,278       75  

1 Includes impairments and movements related to fair value hedges. Gains and losses are recorded in the line item results from financial transactions of the income statement.

2 Total gains and losses are recorded in line items Gains/ (losses) on revaluation of available-for-sale investments and (Gains)/ losses transferred to the income statement on disposal and impairment of available-for-sale investment of the statement of other comprehensive income.

3 Total gains / (losses) for the period during which the financial instrument was in Level III.

Fair value information about financial instruments not measured at fair value

The following table presents the carrying values and estimated fair values of financial assets and liabilities, excluding financial instruments which are carried at fair value on a recurring basis.

 

Fair value information about financial instruments not measured at fair value  
EUR millions    Carrying amount
June 30, 2020
   Total estimated
fair value June
30, 2020
   Carrying amount
December 31,
2019
   Total estimated
fair value
December 31,
2019

Assets

               

Mortgage loans - held at amortized cost

     39,288        42,961        38,524        42,567  

Private loans - held at amortized cost

     4,257        5,008        4,487        5,159  

Other loans - held at amortized cost

     2,122        2,122        2,353        2,353  
     

Liabilities

               

Subordinated borrowings - held at amortized cost

     2,208        2,256        2,207        2,416  

Trust pass-through securities - held at amortized cost

     141        148        136        144  

Borrowings – held at amortized cost

     8,435        8,462        8,845        9,322  

Investment contracts - held at amortized cost

     19,535        20,127        18,382        18,964  

Financial instruments for which carrying value approximates fair value

Certain financial instruments that are not carried at fair value are carried at amounts that approximate fair value, due to their short-term nature and generally negligible credit risk. These instruments include cash and cash equivalents, short-term receivables and accrued interest receivable, short-term liabilities, and accrued liabilities. These instruments are not included in the table above.

 

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14. Share capital

 

     
              
EUR millions    Jun. 30, 2020            Dec. 31, 2019  
     

Share capital - par value

     323        323  

Share premium

     7,213        7,213  

Total share capital

     7,536        7,536  
     

Share capital - par value

         

Balance at January 1

     323        322  

Dividend

     -        1  

Balance

     323        323  
     

Share premium

         

Balance at January 1

     7,213        7,487  

Share dividend

     -        (273

Balance

     7,213        7,213  

 

     
             
EUR millions    First half
2020
    First half
2019
 
   

Earnings per share (EUR per share)

      

Basic earnings per common share

     0.08       0.28  

Basic earnings per common share B

     -       0.01  

Diluted earnings per common share

     0.08       0.28  

Diluted earnings per common share B

     -       0.01  
   

Earnings per share calculation

      

Net income / (loss) attributable to owners of Aegon N.V.

     202       616  

Coupons on other equity instruments

     (28     (48

Earnings attributable to common shares and common shares B

     173       568  
   

Earnings attributable to common shareholders

     172       564  

Earnings attributable to common shareholders B

     1       4  
   

Weighted average number of common shares outstanding (in millions)

     2,040       2,036  

Weighted average number of common shares B outstanding (in millions)

     560       572  

Final dividend 2019

Aegon proposed in its Annual Report 2019 a final 2019 dividend of EUR 0.16 per common share and EUR 0.004 per common share B, absent further deterioration of the market circumstances, and based on the assessments made at that time. On April 2, 2020, due to the market turmoil, the European Insurance and Occupational Pensions Authority (EIOPA) and Dutch Central Bank (DNB) made a call to postpone all dividend distributions. Subsequently, it was decided at the Annual General Meeting of Shareholders on May 15, 2020, to forego the 2019 final dividend. Taking into account the interim dividend paid in September 2019, this resulted in a total dividend for the financial year 2019 of EUR 0.15 per common share and EUR 0.00375 per common share B, paid in September 2019.

15. Insurance contracts

Insurance contracts increased by EUR 4.7 billion to EUR 127.6 billion compared to December 31, 2019 mainly due to a decrease of interest rates.

16. Insurance contracts for account of policyholders

Insurance contracts for account of policyholders decreased by EUR 6.7 billion to EUR 129.0 billion compared to December 31, 2019 mainly due to interest rates movements.

 

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17. Investment contracts for account of policyholders

Investment contracts for account of policyholders decreased by EUR 6.9 billion to EUR 87.0 billion compared to December 31, 2019 mainly due to interest rate movements.

18. Borrowings

 

     
        
EUR millions    Jun. 30, 2020                      Dec. 31, 2019
     

Capital funding

     1,688       1,745  

Operational funding

     7,203       7,562  

Total borrowings

     8,891       9,307  

Included in borrowings is EUR 456 million relating to borrowings measured at fair value (December 31, 2019: EUR 537 million). During the first six months of 2020, the operational funding decreased by EUR 0.4 billion mainly due to the redemption of ‘SAECURE 15’ of EUR 0.9 billion, partly offset by an increase in other mortgage loan funding of EUR 0.5 billion.

19. Financial risks

Results of Aegon’s sensitivity analyses are presented in the table below which shows the estimated sensitivity of net income and shareholders’ equity to various scenarios. The table below include Group sensitivities on interest rate risk, equity market risk, and also sensitivities on bond credit spreads and liquidity premium.

 

EUR millions    June 30, 2020     December 31, 2019  
      Estimated
approximate
effects on net
income
    Estimated
approximate
effects on
shareholders’
equity
    Estimated
approximate
effects on net
income
    Estimated
approximate
effects on
shareholders’
equity
 

Sensitivity analysis of net income and shareholders’ equity to markets Immediate change of

            

Equity increase 10%

     136       261       307       450  

Equity decrease 10%

     (213     (357     (374     (525

Equity increase 25%

     241       557       721       1,083  

Equity decrease 25%

     (547     (903     (456     (837
     

Parallel movements of yield curve

            

Immediate movements of yield curve, but not permanently

            

Shift up 100 basis points

     207       (3,714     370       (3,263

Shift down 100 basis points

     (686     1,712       (585     2,499  
     

Bond Credit Spreads

            

Immediate shock

            

Shift up 50 basis points

     (317     (3,076     (205     (2,386

Shift down 50 basis points

     325       1,546       198       2,117  
     

Liquidity premium

            

Shift up 5 basis points

     155       152       104       101  

Shift down 5 basis points

     (157     (154     (105     (103

 

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20. Capital management and solvency

Aegon’s capital consists of 3 Tiers as an indication of its quality, with Tier 1 capital ranking highest. The available own funds number reflects Aegon’s interpretation of Solvency II requirements which is subject to supervisory review.

The table below provides the composition of Aegon’s available own funds across Tiers:

 

      June 30, 2020
Available
own funds
    

December 31, 2019

Available

own funds

 
   

Tier 1 - unrestricted

     11,588        12,724  

Tier 1 - restricted

     2,622        2,614  

Tier 2

     2,505        2,370  

Tier 3

     786        762  

Total available own funds

     17,501        18,470  

Tier 1 unrestricted capital decreased compared to December 31, 2019. The decrease in Tier 1 unrestricted capital amounted to EUR 1,136 million, and is mainly driven by the market disruption led by the COVID-19 pandemic in the first half year as interest rates declined considerably, compounded by the negative market impact from increase of credit spreads and widening of mortgage spreads, partly offset by the positive expected return on Aegon in-force insurance portfolio and the increase of EIOPA VA by 12 bps. The restricted Tier 1 capital slightly increased by EUR 8 million.

Tier 2 capital increased by EUR 135 million as a result of increased market value of Tier 2 instruments, due to the decrease of interest rates.

Tier 3 capital as of June 30, 2020 is comprised of deferred tax assets balances related to Solvency II entities. The increase of EUR 25 million is mainly driven by higher deferred tax assets from Aegon US non-regulated entities, partly offset by lower deferred tax assets from Aegon the Netherlands. In addition, there is an own funds eligibility haircut of EUR 38 million applied at June 30, 2020. This is driven by the Tier 3 capital which is capped at maximum 15% of SCR, therefore, the eligible own funds is EUR 38 million lower than available own funds.

 

IFRS-EU equity compared to Solvency II own funds

 

 

        
EUR millions   

June 30, 2020

 

    

                December 31, 2019

 

 
   

Shareholders’ Equity

     23,914         22,449   

IFRS adjustments for Other Equity Instruments and non controlling interests

     2,580         2,591   

Group Equity

     26,494         25,040   

Solvency II revaluations and reclassifications

     (10,862)        (8,206)  

Transferability restrictions 1

     (1,949)        (1,973)  

Excess of Assets over Liabilities

     13,683         14,861   

Availability adjustments

     4,660         4,446   

Fungibility adjustments 2

     (842)        (838)  

Available own funds

     17,501         18,470   

1 This includes the transferability restriction related to the RBC CAL conversion methodology

2 Amongst others, this contains the exclusion of Aegon Bank

The Solvency II revaluations and reclassifications of EUR 10,862 million negative (2019: EUR 8,206 million negative) stems from the difference in valuation and presentation between IFRS-EU and Solvency II frameworks. The change in Solvency II revaluations per June 30, 2020 compared to December 31, 2019 is mainly driven by lower interest rates and tightening credit spreads during first half 2020, increasing the revaluation reserves in Aegon US.

 

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The Solvency II revaluations can be grouped into four categories:

Items that are not recognized under Solvency II. The most relevant examples of this category for Aegon include Goodwill, DPAC and other intangible assets (EUR 2,184 million negative, December 31, 2019: EUR 1,932 million negative);

 

Items that have a different valuation treatment between IFRS-EU and Solvency II. Solvency II is a market consistent framework hence all assets and liabilities are to be presented at fair value while IFRS-EU also includes other valuation treatments in addition to fair value. The most relevant examples of this category for Aegon Group include Loans and Mortgages, Reinsurance Recoverables, Deferred tax assets balances and Technical provisions. The revaluation difference stemming from this category amounted to EUR 2,436 million positive (2019: EUR 2,753 million positive) compared to the IFRS-EU Statement of Financial Position;

 

The Net Asset Value of subsidiaries that are included under the Deduction & Aggregation method (on provisional equivalence or Standard Formula basis) in the Group Solvency II results. The revaluation difference stemming from this category amounted to EUR 7,658 million negative (2019: EUR 5,655 million negative) compared to the IFRS-EU Statement of Financial Position;

 

Reclassification of subordinated liabilities of EUR 3,457 million negative (2019: EUR 3,372 million negative). The movement of subordinated liabilities mainly stem from the market movement as a result of lower interest rates.

The transferability restrictions reflect the restrictions on US Life Companies DTA and capping of Tier 1 unrestricted own funds as a consequence of the RBC CAL conversion methodology.

The availability adjustments are changes to the availability of own funds of Aegon Group in accordance with Solvency II requirements. Examples include the adjustments for subordinated liabilities, ring-fenced fund, treasury shares and foreseeable dividend.

Finally, the fungibility restrictions limit the availability of own funds on Aegon Group level as prescribed by Supervisory Authorities. These limitations refer to charitable trusts in the Americas for which the local Supervisory Authority could limit the upstream of capital to the Group, and Aegon Bank which is under a different regulatory regime but under the same Supervisory Authority and therefore excluded for Solvency II purposes.

21. Commitments and contingencies

There have been no material changes in commitments and contingencies as reported in the 2019 Annual Report.

22. Acquisitions/Divestments

On January 29, 2020, Aegon announced the completion of the sale of its 50% stake in the Japanese variable annuity joint ventures, Aegon Sony Life Insurance Co. and SA Reinsurance Ltd., to partner Sony Life. The proceeds of the sale amounted to EUR 153 million and the book gain amounted to EUR 53 million.

 

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23. Post reporting date events

On July 30, 2020, Aegon announced the completion of the expansion of its partnership with Santander in Spain. This follows the agreement signed on July 3, 2018 between Aegon and Banco Santander to expand their life and non-life insurance partnership, following Banco Santander’s acquisition of Banco Popular.

Aegon’s insurance joint ventures with Banco Santander in Spain completed the acquisition of the in force term life policies previously sold through Banco Popular branches as well as the right to write new term life and selected lines of non-life policies through the former Banco Popular branches now owned by Banco Santander.

The transaction was closed following satisfaction of all closing conditions, including the termination of existing alliances of Banco Popular. For its 51% stake in the expansion of the joint venture with Banco Santander, Aegon paid an upfront amount of EUR 187 million – lower than the EUR 215 million communicated in July 2018 mainly due to the results of the in-force portfolio which accrued to Santander till closing. Furthermore, the previously agreed contingent payment of up to EUR 75 million is due in 2024, subject to the performance of the partnership.

On July 11, 2020, the Dutch Central Bank (DNB) published industry-wide guidelines regarding the treatment of banks in Solvency II ratios. As a consequence, Aegon will include Aegon Bank in the calculation of its Group Solvency II ratio from December 31, 2020. If Aegon Bank would have been consolidated in Aegon’s Group Solvency II ratio already, Aegon’s Solvency II own funds position of EUR 17.5 billion as disclosed in note 20 Capital management and solvency to these condensed consolidated interim financial statements, would have increased by approximately EUR 0.7 billion or 4% to EUR 18.2 billion at June 30, 2020. Note that the Group Solvency II ratio, however, would have decreased as the Solvency Capital Requirement would have increased as well.

 

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Management statement

The interim report for the six-month period ended June 30, 2020, consists of the condensed consolidated interim financial statements, the first half 2020 results release and this responsibility statement by the Company’s Executive Board. The information in this interim report is unaudited.

The Executive Board is responsible for preparing the condensed consolidated interim financial statements in accordance with Dutch law and IAS 34, Interim Financial Reporting, as adopted by the European Union.

The Executive Board declares that, to the best of its knowledge, the condensed consolidated interim financial statements which have been prepared in accordance with lAS 34, Interim Financial Reporting, as adopted by the European Union, give a true and fair view of the assets, liabilities, financial condition and profit or loss of Aegon N.V. and the undertakings included in the consolidation as a whole and that the first half 2020 results release includes a fair review of the information required pursuant to section 5:2Sd, subsections 8 and 9 of the Dutch Act on Financial Supervision (Wet op het financieel toezicht).

The Hague, the Netherlands, August 12, 2020

Lard Friese

Chairman of the Executive Board and CEO

Matthew J. Rider

Member of the Executive Board and CFO

 

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Review report

To: The Supervisory Board and the Executive Board of Aegon N.V.

Introduction

We have reviewed the accompanying condensed consolidated interim financial information for the six-month period ended June 30, 2020 of Aegon N.V., the Hague, which comprises the condensed consolidated statement of financial position as at June 30, 2020, the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of changes in equity, the condensed consolidated cash flow statement for the period then ended and the selected explanatory notes. The Executive Board is responsible for the preparation and presentation of this (condensed) interim financial information in accordance with IAS 34, ‘Interim Financial Reporting’ as adopted by the European Union. Our responsibility is to express a conclusion on this interim financial information based on our review.

Scope

We conducted our review in accordance with Dutch law including standard 2410, Review of Interim Financial Information Performed by the Independent Auditor of the entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with auditing standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial information for the six-month period ended June 30, 2020 is not prepared, in all material respects, in accordance with IAS 34, ‘Interim Financial Reporting’ as adopted by the European Union.

Amsterdam, August 12, 2020

PricewaterhouseCoopers Accountants N.V.

Original has been signed by G.J. Heuvelink RA

 

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Disclaimers

Cautionary note regarding non-IFRS-EU measures

This document includes the following non-IFRS-EU financial measures: underlying earnings before tax, income tax and income before tax. These non-IFRS-EU measures are calculated by consolidating on a proportionate basis Aegon’s joint ventures and associated companies. The reconciliation of these measures to the most comparable IFRS-EU measure is provided in note 3 ‘Segment information’ of Aegon’s Condensed Consolidated Interim Financial Statements. Aegon believes that these non-IFRS-EU measures, together with the IFRS-EU information, provide meaningful supplemental information about the underlying operating results of Aegon’s business including insight into the financial measures that senior management uses in managing the business.

Forward-looking statements

The statements contained in this document that are not historical facts are forward-looking statements as defined in the US Private 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. Readers are cautioned not to place undue reliance on these forward-looking statements, which merely reflect company expectations at the time of writing. Actual results may differ materially from expectations conveyed in forward-looking statements due to changes caused by various risks and uncertainties. Such risks and uncertainties include but are not limited to the following:

 

Changes in general economic and/or governmental conditions, particularly in the United States, the Netherlands and the United Kingdom;

Changes in the performance of financial markets, including emerging markets, such as with regard to:

 

  -

The frequency and severity of defaults by issuers in Aegon’s fixed income investment portfolios;

  -

The effects of corporate bankruptcies and/or accounting restatements on the financial markets and the resulting decline in the value of equity and debt securities Aegon holds; and

  -

The effects of declining creditworthiness of certain public sector securities and the resulting decline in the value of government exposure that Aegon holds;

Changes in the performance of Aegon’s investment portfolio and decline in ratings of Aegon’s counterparties;

Lowering of one or more of Aegon’s debt ratings issued by recognized rating organizations and the adverse impact such action may have on Aegon’s ability to raise capital and on its liquidity and financial condition;

Lowering of one or more of insurer financial strength ratings of Aegon’s insurance subsidiaries and the adverse impact such action may have on the written premium, policy retention, profitability and liquidity of its insurance subsidiaries;

The effect of the European Union’s Solvency II requirements and other regulations in other jurisdictions affecting the capital Aegon is required to maintain;

Changes affecting interest rate levels and continuing low or rapidly changing interest rate levels;

Changes affecting currency exchange rates, in particular the EUR/USD and EUR/GBP exchange rates;

Changes in the availability of, and costs associated with, liquidity sources such as bank and capital markets funding, as well as conditions in the credit markets in general such as changes in borrower and counterparty creditworthiness;

Increasing levels of competition in the United States, the Netherlands, the United Kingdom and emerging markets;

Catastrophic events, either manmade or by nature, including by way of example acts of God, acts of terrorism, acts of war and pandemics, could result in material losses and significantly interrupt Aegon’s business;

The frequency and severity of insured loss events;

Changes affecting longevity, mortality, morbidity, persistence and other factors that may impact the profitability of Aegon’s insurance products;

Aegon’s projected results are highly sensitive to complex mathematical models of financial markets, mortality, longevity, and other dynamic systems subject to shocks and unpredictable volatility. Should assumptions to these models later prove incorrect, or should errors in those models escape the controls in place to detect them, future performance will vary from projected results;

Reinsurers to whom Aegon has ceded significant underwriting risks may fail to meet their obligations;

Changes in customer behavior and public opinion in general related to, among other things, the type of products Aegon sells, including legal, regulatory or commercial necessity to meet changing customer expectations;

Customer responsiveness to both new products and distribution channels;

As Aegon’s operations support complex transactions and are highly dependent on the proper functioning of information technology, operational risks such as system disruptions or failures, security or data privacy breaches, cyberattacks, human error, failure to safeguard personally identifiable information, changes in operational practices or inadequate controls including with respect to third parties with which we do business may disrupt Aegon’s business, damage its reputation and adversely affect its results of operations, financial condition and cash flows;

The impact of acquisitions and divestitures, restructurings, product withdrawals and other unusual items, including Aegon’s ability to integrate acquisitions and to obtain the anticipated results and synergies from acquisitions;

Aegon’s failure to achieve anticipated levels of earnings or operational efficiencies as well as other cost saving and excess cash and leverage ratio management initiatives;

Changes in the policies of central banks and/or governments;

Litigation or regulatory action that could require Aegon to pay significant damages or change the way Aegon does business;

Competitive, legal, regulatory, or tax changes that affect profitability, the distribution cost of or demand for Aegon’s products;

Consequences of an actual or potential break-up of the European monetary union in whole or in part, or the exit of the United Kingdom from the European Union and potential consequences if other European Union countries leave the European Union;

Changes in laws and regulations, particularly those affecting Aegon’s operations’ ability to hire and retain key personnel, taxation of Aegon companies, the products Aegon sells, and the attractiveness of certain products to its consumers;

Regulatory changes relating to the pensions, investment, and insurance industries in the jurisdictions in which Aegon operates;

Standard setting initiatives of supranational standard setting bodies such as the Financial Stability Board and the International Association of Insurance Supervisors or changes to such standards that may have an impact on regional (such as EU), national or US federal or state level financial regulation or the application thereof to Aegon, including the designation of Aegon by the Financial Stability Board as a Global Systemically Important Insurer (G-SII); and

Changes in accounting regulations and policies or a change by Aegon in applying such regulations and policies, voluntarily or otherwise, which may affect Aegon’s reported results, shareholders’ equity or regulatory capital adequacy levels.

This document contains information that qualifies, or may qualify, as inside information within the meaning of Article 7(1) of the EU Market Abuse Regulation (596/2014). Further details of potential risks and uncertainties affecting Aegon are described in its filings with the Netherlands Authority for the Financial Markets and the US Securities and Exchange Commission, including the Annual Report. These forward-looking statements speak only as of the date of this document. Except as required by any applicable law or regulation, Aegon expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Aegon’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

 

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Corporate and shareholder information

Headquarters

Aegon N.V.

P.O. Box 85

2501 CB The Hague

The Netherlands

+ 31 (0) 70 344 32 10

aegon.com

Group Corporate Communications & Investor Relations

Media relations

+ 31 (0) 70 344 8344

gcc@aegon.com

Investor relations

+ 31 (0) 70 344 83 05

or 877 548 96 68 - toll free, USA only

ir@aegon.com

 

Publication dates results   
February 11, 2021    2H 2020 Results

 

 

About Aegon

Aegon’s roots go back 175 years – to the first half of the nineteenth century. Since then, Aegon has grown into an international company, with businesses in more than 20 countries in the Americas, Europe and Asia. Today, Aegon is one of the world’s leading financial services organizations, providing life insurance, pensions and asset management. Aegon’s purpose is to help people achieve a lifetime of financial security. More information: aegon.com.

 

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