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
Aegons 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.
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(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 |
Condensed consolidated interim financial statements 1H 2020 Results Helping people achieve a lifetime of financial security The Hague, August 13, 2020
Condensed consolidated interim financial statements 1H 2020 Results
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Condensed consolidated interim financial statements 1H 2020 Results
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Notes to the Condensed consolidated interim financial statements |
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Condensed consolidated interim financial statements 1H 2020 Results
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
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
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
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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
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
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 Aegons Integrated Annual Report for 2019. Aegons 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 Aegons 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
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First half 2019 (as previously reported) |
Change in accounting policy related to Reinsurance Accounting |
First half 2019 (restated) |
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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: |
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- 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 |
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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
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First half 2019 (as previously reported) |
Change in accounting policy related to Reinsurance Accounting |
First half 2019 (restated) |
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Net income |
618 | (2 | ) | 617 | ||||||||||||
Items that may be reclassified to profit or loss: |
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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: |
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- 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
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Dec 31, 2019 (as previously reported) 1 |
Change in accounting policy related to Reinsurance Accounting |
Dec 31, 2019 (restated) |
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Assets |
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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 |
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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 Aegons Integrated Annual Report 2019 dated March 18, 2020. |
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Impact of voluntary change in accounting policy on the condensed consolidated statement of changes in equity
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June 30, 2019 (as previously reported) |
Change in accounting policy related to Reinsurance Accounting |
June 30, 2019 (restated) |
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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 Aegons net income for first half year 2020 and shareholders equity and Aegons statement of financial position at June 30, 2020 is not significant.
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Condensed consolidated interim financial statements 1H 2020 Results
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 Aegons 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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Condensed consolidated interim financial statements 1H 2020 Results
In the first half of 2020, Aegons economic assumptions were updated downwards to reflect the current low interest rate environment in Aegons 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 Aegons 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 Aegons 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 Aegons 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 Aegons 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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Condensed consolidated interim financial statements 1H 2020 Results
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 Aegons 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 |
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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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Condensed consolidated interim financial statements 1H 2020 Results
3. Segment information
3.1. Change in operating segments
As of January 1, 2020, Aegons 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 |
Consolidated | ||||||||||||||||||||||||||||||
Six months ended June 30, 2020 |
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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 |
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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 |
Consolidated | ||||||||||||||||||||||||||||||
Six months ended June 30, 2019 |
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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 |
Aegons segment information is prepared by consolidating on a proportionate basis Aegons 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.
Unaudited
|
|
Condensed consolidated interim financial statements 1H 2020 Results
The negative impact in respect of actuarial assumption updates amounted to EUR 357 million and is attributable to Aegons 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 Aegons 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
|
|
Condensed consolidated interim financial statements 1H 2020 Results
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
|
|
Condensed consolidated interim financial statements 1H 2020 Results
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).
Unaudited
|
|
Condensed consolidated interim financial statements 1H 2020 Results
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.
Unaudited
|
|
Condensed consolidated interim financial statements 1H 2020 Results
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, Aegons 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.
Unaudited
|
|
Condensed consolidated interim financial statements 1H 2020 Results
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.
Unaudited
|
|
Condensed consolidated interim financial statements 1H 2020 Results
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 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 |
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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.
Unaudited
|
|
Condensed consolidated interim financial statements 1H 2020 Results
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.
Unaudited
|
|
Condensed consolidated interim financial statements 1H 2020 Results
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 Aegons 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 | ) |
Unaudited
|
|
Condensed consolidated interim financial statements 1H 2020 Results
20. Capital management and solvency
Aegons capital consists of 3 Tiers as an indication of its quality, with Tier 1 capital ranking highest. The available own funds number reflects Aegons interpretation of Solvency II requirements which is subject to supervisory review.
The table below provides the composition of Aegons 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.
Unaudited
|
|
Condensed consolidated interim financial statements 1H 2020 Results
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.
Unaudited
|
|
Condensed consolidated interim financial statements 1H 2020 Results
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 Santanders acquisition of Banco Popular.
Aegons 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 Aegons Group Solvency II ratio already, Aegons 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.
Unaudited
|
|
Condensed consolidated interim financial statements 1H 2020 Results
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 Companys 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
Unaudited
|
|
Condensed consolidated interim financial statements 1H 2020 Results
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
Unaudited
|
|
Condensed consolidated interim financial statements 1H 2020 Results
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 Aegons 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 Aegons 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 Aegons 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 Aegons 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 Aegons investment portfolio and decline in ratings of Aegons counterparties; |
◆ | Lowering of one or more of Aegons debt ratings issued by recognized rating organizations and the adverse impact such action may have on Aegons ability to raise capital and on its liquidity and financial condition; |
◆ | Lowering of one or more of insurer financial strength ratings of Aegons 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 Unions 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 Aegons business; |
◆ | The frequency and severity of insured loss events; |
◆ | Changes affecting longevity, mortality, morbidity, persistence and other factors that may impact the profitability of Aegons insurance products; |
◆ | Aegons 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 Aegons 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 Aegons 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 Aegons ability to integrate acquisitions and to obtain the anticipated results and synergies from acquisitions; |
◆ | Aegons 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 Aegons 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 Aegons 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 Aegons 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 Aegons expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
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Condensed consolidated interim financial statements 1H 2020 Results
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
Investor relations
+ 31 (0) 70 344 83 05
or 877 548 96 68 - toll free, USA only
Publication dates results | ||
February 11, 2021 | 2H 2020 Results |
About Aegon
Aegons 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 worlds leading financial services organizations, providing life insurance, pensions and asset management. Aegons purpose is to help people achieve a lifetime of financial security. More information: aegon.com.
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